Taxes When Buying And Selling A Home In Canada (2025 Guide)

Taxes When Buying and Selling a Home in Canada (2025 Guide)

Published June 17, 2025 | WealthFusions Editorial Team

Taxes When Buying and Selling a Home in Canada

Taxes When Buying a Home

Land Transfer Tax (LTT): Provincial tax based on the purchase price, varies by province. For example, Ontario’s LTT can reach up to 2.5%.
GST/HST: Applies on new homes or substantially renovated properties. First-time homebuyers may get rebates.
Property Tax: Annual tax based on property value, payable to municipal governments after purchase.
Additional Taxes: Some provinces impose foreign buyer taxes or speculation taxes.

Taxes When Selling a Home

Capital Gains Tax: Applies if the property is not your principal residence. The gain (profit) is taxed as income.
Principal Residence Exemption: Generally, the sale of your primary home is exempt from capital gains tax.
Reporting Sale: Sellers must report the sale on their tax return, even if exempt, to claim the exemption properly.
Other Costs: Consider real estate commissions and legal fees, which aren’t taxes but affect net proceeds.

📌 Tip: Tax laws can vary and change—consult a tax professional or real estate expert to understand your specific situation and maximize benefits.

Buying or selling a home in Canada comes with tax implications that can impact your budget, eligibility for rebates, and net proceeds. Whether you’re a first-time buyer or a seasoned investor, understanding how taxes like the Land Transfer Tax and Capital Gains Tax apply is essential. In this article, we break down all the key taxes, offer real examples, and help you plan smarter during a home transaction in 2025.

1. Land Transfer Tax (LTT) – When Buying a Home

Every province except Alberta and Saskatchewan charges a Land Transfer Tax (or equivalent). This tax is based on the property’s purchase price and varies by region.

Land Transfer Tax Rates by Province (2025)

Province	Property Price	LTT Rate
Ontario	Up to $2M	0.5% to 2.5% (Toronto adds Municipal LTT)
British Columbia	Up to $3M	1% to 3% + 2% luxury tax over $3M
Quebec	All values	0.5% to 1.5%
Alberta / Saskatchewan	–	No LTT

First-Time Home Buyer Rebates

Ontario: Up to $4,000 rebate
Toronto: Additional $4,475 rebate (municipal LTT)
BC: Full exemption if home ≤$500,000 (partial up to $525,000)

Tip: To qualify, you must not have owned property anywhere in the world and must live in the home within 1 year of purchase.

2. GST/HST – On New Builds or Substantially Renovated Homes

If you’re buying a newly built home or a home that’s been substantially renovated (typically 90%+), you may be required to pay GST or HST:

GST: 5% (Federal)
HST: 13% in Ontario, 15% in NS, PEI, NL, NB

This tax is typically included in the purchase price if buying from a builder. However, if not specified, you may owe it on closing.

New Housing Rebate

Available if the price is less than $450,000 and home is your primary residence
Up to 36% rebate on the GST portion

3. Property Tax – Annual Tax for Owners

Municipal property taxes are assessed annually based on your home’s market value. Average rates range from 0.5% to 2% depending on location.

Sample Property Tax Rates (2025)

City	Assessed Value	Annual Property Tax
Toronto, ON	$800,000	$6,120 (0.765%)
Vancouver, BC	$1,000,000	$2,950 (0.295%)
Calgary, AB	$700,000	$4,410 (0.63%)

Note: If you’re buying mid-year, you may be responsible for a prorated portion of the current year’s tax.

4. Capital Gains Tax – When Selling a Home

Capital gains tax applies when you sell an investment property or second home. Your gain is the selling price minus the adjusted cost base (purchase price + closing costs + renovations).

Important: As of June 2025, only 50% of your capital gain is taxable at your marginal income tax rate.

Example

Purchase Price: $400,000
Sale Price: $600,000
Capital Gain: $200,000
Taxable Amount: $100,000
Tax Owed (at 35% rate): $35,000

Principal Residence Exemption

If the home was your principal residence for every year you owned it, you can claim a full exemption and owe zero capital gains tax.

5. Legal Fees and Closing Costs – Non-Tax, But Must-Know

Though not technically taxes, these closing costs are often mistaken for tax-related charges:

Legal Fees: $1,000–$2,500
Title Insurance: $300–$800
Appraisal: $400–$600 (required by lenders)
Mortgage Insurance (CMHC): Applies if down payment < 20%

Conclusion

Understanding your tax obligations when buying or selling a home in Canada can save you thousands of dollars and avoid surprises. From land transfer taxes to capital gains and GST, each stage of the transaction has specific requirements. If you’re unsure about exemptions or rebates, it’s best to visit our blog today

Frequently Asked Questions

1. Do I pay tax when selling my house in Canada?: If it was your principal residence, you do not pay capital gains tax.
2. Is there a tax on buying resale homes?: No GST/HST on resale homes. Only new or substantially renovated homes include GST/HST.
3. Can I claim the First-Time Home Buyers’ Credit (FTHBC)?: Yes, you can claim up to $1,500 in tax credit federally, plus provincial credits where available.
4. Do I need to report my home sale to the CRA?: Yes. Even if exempt, all property sales must be reported on your tax return.
5. Is land transfer tax deductible?: No, LTT is not tax deductible, but it can be added to your cost base.
6. What if I rent out part of my home?: Partial rental may affect your principal residence exemption. Keep records of use.
7. Is title insurance mandatory?: No, but most lenders require it. It protects against property fraud and title defects.
8. Can I defer capital gains tax?: Yes, via a 1031-like exchange (rollover) in very specific cases, but it’s rare in Canada.