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f you are a first-time homebuyer, you may be eligible for a credit on part of the land transfer tax (“LTT”) that applies on your purchase of real estate in Ontario.

The rules are as follows:

• First time homebuyers may be eligible for a refund of all or part of the LTT
• The refund can be claimed by an individual who has not owned a home or an interest in a home and their spouse (if any) cannot have owned a home or an interest in a home while they were spouses
• Beginning January 1, 2017, the maximum amount of the refund is $4,000. The refund is reduced if one or more purchasers is not a first-time buyer. For example, if a parent who is not a first-time buyer purchases with their child who is a first-time buyer and they own the property equally (50% or as joint tenants) the child can only claim a maximum of 50% for the refund amount

What does this mean for you?

• If a non-first-time buyer purchases with a first-time buyer and the purchasers both agree, title can be taken in a manner that maximizes the eligibility of a refund, e.g. 99% interest going to first-time buyer and 1% going to a non-first-time buyer. The first-time buyer will then be able to claim 99% of the total eligible refund amount.
• Where a parent buying with their child does not acquire a beneficial interest in the property (i.e. is holding it in trust for a child) the Ministry of Finance will accept that the parent is a trustee for the child if evidence is submitted (e.g. a trust agreement or a letter from the bank confirming the parent is on title for mortgage purposes)
• A qualified first-time buyer may also claim a refund in proportion to his or her spouse’s interest if that spouse owned a home before becoming a spouse, but not while being that purchaser’s spouse.

We encourage you to ask one of our lawyers on options for taking title to your new home that will minimize the applicable LTT.