Transfer duties

Transfer duties, commonly known as the “Welcome tax" were established in the 70’s by the former Liberal minister Jean Bienvenue (Bienvenue means “welcome” in French). An additional source of revenue for cities and municipalities, the tax requires you, as the new owner, to pay duties on the acquisition of real estate. It applies to transfers of any new or used building and land, unless exempted by Law.

 

Any new owner has 30 days to pay his transfer duties from the receipt of an   invoice asking him to pay. Generally, this invoice is sent a few weeks after the acquisition of the apartment.

The calculation of transfer duties

Before purchasing a property, you should calculate and provide for the amount of transfer duties in your budget. This calculation takes into account the two following elements:

First : You must determine the value to be used to calculate the duties, usually the highest of:

• The amount paid by the purchaser to acquire the property;

or

• The market value, being the equivalent according to  Law, to the standardized value entered on the assessment roll at the time of sale.

Secondly: Then, apply the scale on the value (market value or amount paid) applicable, by adding the total of each bracket:

 

       •   0.5% on the first $ 50,000

  • 1.0% on the bracket of $ 50,001 to $ 250,000
  • 1.5% on the amount exceeding $ 250,001

 

 In Montreal, additional brackets are applicable:

 

  • 2% on the bracket of $ 500,001 to $ 1,000,000
  • 2.5% on the amount exceeding $ 1,000,001

 

To better understand how to calculate the value applicable to transfer duties, please review the following example. For a property with a value of $ 300,000, the amount of the transfer duty is calculated as follows:

 

  • For the bracket of $ 0 to $ 50,000:

0.5% x $50, 000.00 :

 

 $   250.00

  • For the bracket of $ 50,001 to $ 250,000 :

1,0 % x $ 200 000,00 :

+

 $ 2,000.00

  • For the bracket of $ 250,001 to $ 300,000 :

1,5 % x  $  50 000,00 :

+

 $    750.00

                                                                                                                                             Total:                $ 3 000.00

 

 

Exemption

Upon the transfer of an immovable, the purchaser may be exempt from paying property transfer duties, more particularly in the following two cases:

  • If the value is less than $ 5,000;

  • If it is a transfer between relatives, either:

     In direct ascending or descending line (son, daughter, father, mother);

     Between married or common law spouses;

     Between stepfather or stepmother and son or daughter in law;

     Between stepfather and stepmother and step-son or step-daughter;

Other exempted situations are provided. A jurist will advise you whether they apply to your transfer.

 

WHAT YOU SHOULD KNOW ! The calculation of transfer duties is based on the highest of the selling price and of the municipal evaluation. GST and QST are added to the total amount payable.

WHAT TO KEEP IN MIND :  Transfers between brothers and sisters are not exempt from transfer duties.

 WARNING ! If the exemption is applicable, the municipality may still require that failing a transfer duty, a supplementary fee be paid. The supplementary fee is financial compensation required by a municipality that usually do not exceed $200.

Back to the factsheets