Is there Land Transfer Tax in Alberta?

Is there Land Transfer Tax in Alberta?

What is a land transfer tax, and is there one in the Canadian province of Alberta? Regardless of where you live in the world, tax is unavoidable! Many countries and jurisdictions have sales tax, income tax & property tax – and typically that’s just the tip of the iceberg. Savvy investors and asset buyers often look to minimize tax as much as possible. This can be a way to keep more of your returns or just keep more money in your pocked as a homebuyer! In this article, lets take a look at which Canadian provinces have high land transfer tax – and most importantly – which don’t!

As always, please feel free to contact me directly via text, email or call if you have any questions about buying or selling property in Alberta. I’m here to help!

Note: This article is for informational purposes only and is not intended to provide legal or tax advice. Always consult with your tax professional regarding all tax matters!

What is Land Transfer or Property Transfer Tax?

Land transfer tax is a tax levied by governments when someone purchases a property. Transfer tax can be applied by state or sub-state governments, and in Canada, it is typically applied by Provincial and even Regional or Municipal Governments.

Land transfer tax was introduced in most provinces in the 1970s and 1980s as a source of revenue for municipalities. While it still fulfills this role, some provinces such as British Columbia and Ontario have expanded property taxation to deter foreign buyers who may artificially drive up prices. In both Ontario and BC, the foreign buyers tax is currently 20% in addition to their property transfer tax.

Certain cities such as Toronto and Montreal levy their own additional Municipal transfer tax (or “welcome tax”) as well! (Ouch!)

What Provinces have the Highest Land Transfer Tax?

Most provinces have different ways of calculating their land transfer tax. You should always be sure to consult with government authorities and your tax professional before factoring in how much tax you might pay. Some of the higher examples of property transfer tax would be:

Ontario:

“If an agreement of purchase and sale is entered into after November 14, 2016, and registration or the disposition occurs on or after January 1, 2017, the tax rates on the value of the consideration are as follows:

• amounts up to and including $55,000: 0.5%
• amounts exceeding $55,000, up to and including $250,000: 1.0%
• amounts exceeding $250,000, up to and including $400,000: 1.5%
• amounts exceeding $400,000: 2.0%
• amounts exceeding $2,000,000, where the land contains one or two single family residences: 2.5%.”

Government of Ontario Source Here

British Columbia:

“The general property transfer tax applies for all taxable transactions. The general property transfer tax rate is:

• 1% of the fair market value up to and including $200,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000
• 3% of the fair market value greater than $2,000,000
• If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000. ”

Government of BC Source Here

There is NO Land Transfer “Tax” In Alberta!

That’s right! There is no Land Transfer Tax in Alberta. Only a small (by comparison) Registration Fee. This is a fee to cover the costs of changing the title and ownership records, with anything additional going to provincial and municipal costs, like other taxes.

Alberta Land Registration Fee:

• $50 base cost + $2.00 per $5,000 of fair market value for transfer of land or leasehold
• $50 base cost + $2.00 per $5,000 of mortgage amount for mortgage registration

Alberta vs. Other Provinces

This small registration fee can make a big difference on a property purchase! For example, on a $3.5M home bought with Cash (no mortgage), transfer costs would be:

Ontario: $73,975 (double this to an eye-watering $147,950 if you’re buying in Toronto)

British Columbia: $98,000

Alberta: $1450

Looking at the examples above, I wouldn’t call the difference in cost inconsequential.

Is it possible to reduce Tax?

Closing costs always tend to add up once you factor in movers, lawyers, and different utility costs. So it’s reasonable to want to reduce fees in any way possible. In some cases, such as a court ordered transfer or a transfer between divorcing spouses, taxes and fees can be reduced. For first time homebuyers in many jurisdictions that charge high taxes, there are rebates and reductions that can come into play as well.

Is there Land Transfer Tax in Alberta?

There are two things you can be certain of in life: death and taxes! With careful planning and selection though, as a Canadian Homeowner, you can reduce the amount you pay by selecting a low-cost jurisdiction for your home, vacation property or investment real estate. Always be sure to check with your tax professional or accountant regarding all tax matters.

Of course, working with a smart agent who only looks out for your best interests can make any real estate process less “taxing” (hold for dad-joke laughs). I’m ready to connect for your next purchase or sale and no question is too small!

Cheers.