Capital Gains Tax

Some place back in my head, I remember hearing that if you own 2 properties and then sell one of them, you have to pay a capital gains tax on it.  I wondered how that would work if I lived in one house while building another.  The question that I posted to the government “would I have to pay capital gains tax” when I finished building a place and sold the original home.  Here is the answer that I got. I did not ask about the land transfer tax 😦

Thank you for your email to the Ontario Ministry of Finance. We have provided general information regarding land transfer tax.

Ontario’s Land Transfer Tax – General

Ontario’s land transfer tax is a broad based, low rate tax imposed on every person acquiring land in Ontario. Generally, land transfer tax is payable on every transfer of land tendered for registration and every unregistered disposition of a beneficial interest in land, unless specifically exempt under the act or its regulations.

“Value of the consideration”

Land transfer tax is calculated on the “value of the consideration” as defined in subsection 1(1) of the act. It includes not only the purchase price but benefits conferred as well as any liabilities assumed as part of the arrangement relating to the transfer of land and in some cases is deemed to be the fair market value of the land.

The land transfer tax payable is calculated on the value of the consideration given to receive the land. The value of the consideration would include, but is not limited to:

·         the mortgage outstanding and accrued interest up to the time of registration, if applicable,

·         any liability assumed or undertaken by or on behalf of the transferee such as a vendor take back mortgage,

·         monies paid or to be paid by the transferee or on behalf of the transferee for the transfer,

·         any benefit conferred by the transferee or on behalf of the transferee for the transfer.

You may wish to review Calculating Land Transfer Tax to determine your exact land transfer tax liability. For more details, please review the Land Transfer Tax Act.

Further Information

If you have any questions regarding this response, you can speak directly with a Land Transfer Tax Analyst from 8:30 am to 5:00 pm Monday to Friday, excluding holidays by calling 1-866-ONT-TAXS (1-866-668-8297).



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