How Much is Land Transfer Tax in Alberta?

When you close on your home land transfer tax will make up the bulk of your closing costs. It is also the one part of your closing costs that can’t be rolled into a mortgage or paid directly by the seller (though they can offer you credits to cover the costs in other ways).

First time home buyers often overlook this added cost, but it’s important to understand how land transfer tax works in Alberta. This will allow you to plan and budget for this expense just as you’d plan and budget for any other expense associated with purchasing a home.

How much is Alberta residential land transfer tax?

The land transfer tax depends on the percentage of your down payment, as well as the purchase price. In Alberta it usually comes out to about 0.07% to 0.14% of the purchase price of the home, depending on how much of the purchase price is mortgaged and how much you put down as a down payment on the home.

It’s not very expensive. You could put 20% down on a $1 million home and end up with a land transfer tax of just $460. Most homeowners are able to pay their tax share without incident, even first time home buyers.

How much is Alberta commercial land transfer tax?

Alberta does not charge a commercial land transfer tax. If you are purchasing a commercial property you will still have closing costs, but land transfer taxes will not be among them.

How do you find out how much your land transfer tax will be?

You can use this calculator to discover the exact land transfer tax for the home you propose to buy. Just plug in the purchase price of the home and the down payment percentage to get the exact amount you’ll need to bring to your closing.

How is transfer tax calculated?

Another way to calculate land transfer tax is to note that there’s a $50 base plus $2 for every $5000 of property value on the property value and a $50 base plus $1.50 for every $5000 or part thereof of the mortgage amount. Both the mortgage amount and the property value get taken into account.

So on a $100,000 house, you get $50 plus $40 (20 $5000 value portions) for a total of $90 on the property value. If you put $5000 down on the mortgage you pay another $88 for a total of $178.

These are more formally called the property registration fee and the mortgage registration fee. On paper, Alberta doesn’t charge a land transfer tax, but they amount to the same thing.

In some provinces, the land transfer tax is based off the fair market value of the land instead of the sales price. For example, in Ontario, the fair market value of the land is used when there is the transfer of a lease with a remaining term that can exceed 50 years, when there is a transfer of land from a corporation to one of its shareholders, or when there is a transfer of land to a corporation, if shares of the corporation are issued.

Other provinces will issue higher rates as well, and rates can go up if you aren’t a resident or don’t intend to live in the home.

With the exception of Quebec and Nova Scotia, which have no land transfer taxes at all, Alberta has lower land transfer tax rates than any other province. British Columbia does offer a first-time home buyer’s rebate that reduces land transfer taxes to zero, and Ontario has one that keeps the costs low.

Who pays land transfer tax in Alberta?

The buyer pays the land transfer tax at closing. You’ll usually bring a certified check to closing for the amount or wire the money to the appropriate place at closing. This may be bundled with other monies that are owed at closing.

As mentioned, the land transfer tax is the one closing cost that cannot be rolled into a mortgage or handled by the seller directly. It is the buyer’s responsibility.

What is the purpose of land transfer tax?

In part the tax is to cover the cost of changing the title and ownership of the property in the records. In other parts of the world it may be known as a “deed tax,” “mortgage registry tax,” or “stamp tax.

These taxes create significant revenue for provinces and municipalities. For example, in 2019 Alberta lawmakers considered levying a 1% land transfer tax in addition to the existing fees. This would have raised $500 million to $1.5 billion per year and might have helped address the deficit. Many lawmakers felt it would impose an undue burden on middle class homeowners.

Like all taxes, this revenue goes to roads, public schools, and other public services.

Is there a way to lower land transfer tax?

Not directly. Alberta already has one of the lowest land transfer tax requirements in the entire nation.

There are ways to lower your closing costs, and to make transfer tax more affordable if you need the help. For example, you can apply for any number of down payment assistance programs. These can free up funds so that paying your transfer tax is easier.

You can also lower transfer taxes a little by making a larger down payment, since the amount of the mortgage does matter to the final calculation. Lowering the mortgage then lowers the tax.

How long does a land transfer take?

Land transfers typically take three to seven days.

Questions about land transfer taxes, or other issues related to buying and selling a home?

The team at Edmonton Real Estate Law is here and ready to help. We have decades of experience with real estate law and help Albertans buy, sell, and lease property every single day.

Call (780) 488-4152 to schedule an appointment. We will protect your interests, explain your options, and answer all of your questions.

About Donald I.M. Outerbridge

Donald became the Executive Director of Merchant Law Group LLP starting in 1993, nearly 30 years ago. His experience managing law firms at various levels and in multiple provinces across Canada goes back even further to 1981.