You’ve done it. After months or even years of dedicated saving, you’ve built up your down payment, found the perfect home, and your offer has been accepted. It's an exciting, monumental step. But as you prepare for your closing day, you’re likely encountering a long list of additional expenses known as "closing costs."

Of all these costs, the most intimidating is almost always the Land Transfer Tax (LTT). This provincial tax can add thousands, or even tens of thousands, of dollars to the upfront cash you need to have ready, a shocking surprise for many unprepared buyers.

But here is the good news: the government offers significant rebates on this tax specifically for first-time home buyers. Understanding these rebates is the key to minimizing your costs and making your closing day more affordable. This guide will provide a clear, up-to-date explanation for August 2025 of the rebates that are currently active, who qualifies, how much you can save, and exactly how the claim process works.

What is Land Transfer Tax (LTT)?

Before we talk about the savings, it’s important to understand the tax itself.

A Tax on Buying a Home

Whenever a property changes hands in Ontario, the provincial government charges a tax on that transfer of land. It is paid by the buyer and is due in full on the closing day. The amount of tax you pay is calculated as a percentage of your property's purchase price.

The Marginal Tax Brackets

The LTT is not a flat tax. It’s a tiered, marginal system, similar to how income tax works. The rate you pay increases as the value of the property increases.

As of 2025, the Ontario Land Transfer Tax brackets are:

0.5% on the first $55,000

1.0% on the portion from $55,000 to $250,000

1.5% on the portion from $250,000 to $400,000

2.0% on the portion from $400,000 to $2,000,000

2.5% on the portion above $2,000,000

The Double Tax in Toronto

Here is a crucial piece of local knowledge for anyone buying within the City of Toronto (the 416 area code). In addition to the provincial LTT, you are also required to pay a second, Municipal Land Transfer Tax (MLTT). This municipal tax uses a similar tiered structure and effectively doubles the LTT you have to pay, making it a major factor in the cost of buying a home in the city.

Learn more about home equity loans in Ontario

Check your eligibility in under 60 secs.

See How Much I Qualify For

The Active First-Time Buyer Rebates

Now for the good news. To help with affordability, both the province and the City of Toronto offer a significant rebate on the Land Transfer Tax for qualified first-time home buyers.

The Ontario Provincial LTT Rebate

The provincial government of Ontario offers a maximum LTT rebate of $4,000.

What this means: This rebate completely covers the full amount of the provincial LTT on any home with a purchase price of up to $368,333.

For homes priced above that amount, you receive the full $4,000 credit, which is subtracted from the total LTT you owe. For example, if your calculated LTT is $10,000, you would only have to pay $6,000 after the rebate is applied.

The Toronto Municipal LTT Rebate

For buyers in Toronto, the city offers its own separate rebate on the MLTT. The maximum rebate is $4,475.

What this means: This rebate fully covers the municipal tax on the first $400,000 of a home's value.

For homes over $400,000, you receive the full $4,475 credit against the municipal portion of your tax bill. Buyers in Toronto who qualify are eligible to receive both the provincial and municipal rebates.

Who Qualifies as a First-Time Home Buyer?

The government is very strict about the definition of a first-time home buyer. To be eligible for these rebates, you must meet all of the following criteria:

You must be at least 18 years old.

You cannot have owned a home, or an interest in a home, anywhere in the world, at any time.

Your spouse cannot have owned a home, or an interest in a home, anywhere in the world while they were your spouse.

That last point is a critical one. If your spouse or common-law partner has ever owned a home while you were together, you are both disqualified from receiving the first-time buyer rebates, even if your name was never on the title.

Important Note on Recently Canceled Programs

The landscape of government incentives can change. It's important to base your financial planning on the programs that are currently active, not on ones you may have heard about in the past.

The Federal First-Time Home Buyers' Tax Credit

Please be aware that the federal First-Time Home Buyers' Tax Credit, which was a non-refundable tax credit that previously offered up to $1,500 back on a buyer's income tax return, was phased out and concluded in 2024.

Why This Matters for You

This program was effectively replaced by the much more powerful First Home Savings Account (FHSA), which offers far greater and more immediate tax advantages for saving a down payment.

Any older articles online or advice from family and friends referencing the "First-Time Home Buyers' Tax Credit" are now outdated. As of today, Sunday, August 10, 2025, the primary government incentives available to help with the cost of your first home are the Land Transfer Tax rebates, the FHSA, and the RRSP Home Buyers' Plan. A knowledgeable mortgage broker will focus your financial plan around these currently active and highly beneficial programs.

Calculating Your Rebate: Real-World Examples

Let's look at how the math works for a first-time buyer purchasing a $700,000 property.

Scenario A: Buying in Mississauga

As Mississauga is outside of Toronto, you only pay the provincial LTT.

Calculate Ontario LTT on $700,000: The total tax is $10,475.

Subtract the Provincial Rebate: $10,475 - $4,000

Final LTT Payable: $6,475

You would need to have this amount ready in cash for your closing day.

Scenario B: Buying in Toronto

A buyer in Toronto pays both taxes, but also gets both rebates.

Calculate Ontario LTT: $10,475

Subtract Provincial Rebate: $10,475 - $4,000 = $6,475

Calculate Toronto MLTT: The municipal tax on $700,000 is also $10,475.

Subtract Municipal Rebate: $10,475 - $4,475 = $6,000

Final LTT Payable: $6,475 (Provincial) + $6,000 (Municipal) = $12,475

As you can see, even with the larger rebate, the total cash required to cover Land Transfer Tax in Toronto is significantly higher.

How to Claim Your Rebates

This might sound like a complicated process, but the good news is that you don't have to handle the application yourself.

The Role of Your Real Estate Lawyer

The entire LTT calculation and rebate application process is managed by your real estate lawyer as a standard part of their closing duties. You will be asked to sign an affidavit confirming that you meet all the eligibility criteria of a first-time home buyer, and your lawyer takes care of the rest.

A Credit on Closing Day

You do not have to wait for a cheque in the mail. Your lawyer applies for the rebates when they register the property transfer in your name. The rebate amount is then applied as a direct credit on your final statement of adjustments, which is the document that balances all the costs of the transaction. This directly reduces the total amount of cash you need to bring to your lawyer's office to close the deal.

Your Path to an Affordable Closing

While the Land Transfer Tax is a significant and unavoidable closing cost in Ontario, the first-time home buyer rebates provide substantial and immediate financial relief. Planning for this tax—and understanding the rebates you are entitled to—is a key part of building a realistic budget for your first home purchase. As mortgage brokers, we help our clients navigate the current landscape of available government programs to ensure there are no last-minute financial surprises on the path to homeownership.

If you're a prospective first-time buyer, the best first step is a comprehensive plan. Contact our brokerage today, and we can build a complete and up-to-date budget for your first home purchase, so you can move forward with confidence.

Get Personalized Advice

with an Award-Winning Mortgage Broker

4.9 from 812 reviews

Schedule My Call