There are two types of transfer fees to consider when setting up your home. The larger of the two is the land transfer tax on your property. In general, if you purchase land in Canada, you are required to pay land transfer tax. This transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt that is assumed as part of the purchase arrangement. Land transfer tax varies by province, so be sure to consult with your realtor during your purchase negotiations.
(Insider tip: If you’re a first time homebuyer, you may be eligible to receive a refund for all or part of your land transfer dues as part of a government sponsored program. Talk to your professional advisor.)
How to estimate the transfer tax?
In most provinces, it’s relatively easy to guestimate the approximate cost of the land transfer tax on a new property. In Ontario, for example, the calculations are as follows (source: Ontario Ministry of Finance):
• 0.5% of the value of the consideration up to and including $55,000,
• 1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and
• 1.5% of the value of the consideration which exceeds $250,000, and
• 2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.
So, let’s say you’ve purchased a home for $200,000. The rate of land transfer tax on this property will be $275 on the first $55,000 (0.5% of $55,000) plus $1,450 on the remaining $145,000 (1.0% of $145,000) for a total of $1,725.
The second type of transfer fee to keep in mind has to deal with your utility services. Arranging for the transfer is easy; most companies now allow you to set up the entire switch online. Unfortunately, paying for the move is an entirely different animal. Gas and electricity transfers are normally reasonable, depending again on your location and moving timeline. Phone and Internet, on the other hand, can cost considerably more – sometimes as much as $250. The utility company will normally spread this charge over two or three bills as a way to soften the blow; however it’s always best to be aware of these types of charges ahead of time so you can budget accordingly. A representative should be able to provide you with the estimated transfer charges over the phone.