The Hidden Cost of Homeownership: Understanding Toronto’s Land Transfer & Property Tax Burden
As Toronto’s real estate market remains one of the most expensive in Canada, homebuyers and investors must navigate more than just rising home prices and mortgage rates. One of the most overlooked costs? Property taxes. Unlike other cities in Ontario, Toronto imposes a double land transfer tax, significantly increasing upfront and long-term costs for homeowners. Understanding the nuances of property taxation in Toronto can help buyers make more informed decisions and, in some cases, even save money by choosing strategic investments.
A Primer on Property Taxes in Toronto
Property taxes are an annual charge levied on real estate owners, funding essential city services such as public transit, road maintenance, emergency services, and public education. These taxes are determined based on the assessed value of the property, calculated by the Municipal Property Assessment Corporation (MPAC), and multiplied by the city’s tax rate.
The Double Land Transfer Tax: A Unique Burden for Toronto Buyers
Unlike most other cities in Ontario, Toronto homebuyers must pay both the Provincial Land Transfer Tax (PLTT) and the Municipal Land Transfer Tax (MLTT) upon purchasing a property. This double tax structure drastically increases the closing costs for buyers.
How the Double Land Transfer Tax Increases Homeownership Costs
Every Ontario homebuyer must pay the PLTT, but only Toronto buyers pay an additional MLTT, which effectively doubles the land transfer tax bill. This is an upfront cost, meaning buyers must have these funds ready at closing. The impact is significant:
Purchase Price | Land Transfer Tax in Toronto (PLTT + MLTT) | Land Transfer Tax in Other GTA Cities (PLTT only) |
$1,000,000 | $32,950 | $16,475 |
$2,500,000 | $101,950 | $50,975 |
$5,000,000 | $333,900 | $166,950 |
Compared to buyers in Mississauga, Vaughan, or Oakville, a Toronto buyer faces double the land transfer tax, making homeownership considerably more expensive from day one.
Property Tax Rates in 2025: Toronto vs. Other GTA Cities
While Toronto’s property tax rate is relatively low compared to other municipalities, its high property values mean that homeowners pay more in actual taxes. Here’s a comparison using 2025 values:
City | Property Tax Rate (2025) | Annual Property Tax on a $1M Home | Annual Property Tax on a $5M Home |
Toronto | 0.764644% | $7,646 | $38,232 |
Mississauga | 1.034687% | $10,346 | $51,734 |
Vaughan | 0.733706% | $7,337 | $36,685 |
Oakville | 0.834894% | $8,349 | $41,745 |
Markham | 0.699734% | $6,997 | $34,987 |
While Toronto’s property tax rate appears lower, its higher home prices mean the total tax paid is still a major expense. The basis can be found here.
Beyond Property Taxes: Hidden Costs of Buying in Toronto
In addition to property taxes, buyers must account for other significant expenses, including:
Realtor Fees: Typically 5% of the purchase price, split between buyer and seller agents.
Lawyer Fees: Usually range between $1,500–$3,000.
Mortgage Fees & Appraisals: Lenders may require appraisals costing $300–$500, plus potential mortgage insurance.
Medvisory Realty provides buyers with access to a network of trusted professionals, including realtors, mortgage brokers, and real estate lawyers, ensuring a seamless buying experience while helping clients navigate these additional costs effectively. Working with the right experts can result in substantial savings and prevent unexpected financial surprises.
Is Toronto’s Tax Structure Worth It?
Toronto’s real estate market remains one of the most resilient and competitive in Canada, but the city’s taxation policies add significant costs that buyers must be aware of. Compared to surrounding cities like Mississauga, Vaughan, or Oakville, the double land transfer tax and high-value assessments mean homeownership costs extend beyond just the mortgage payment.
Why a Teardown Might Be a Better Deal
Toronto’s property tax system creates an unexpected scenario where, in some cases, buying a home that requires significant renovation might be a smarter financial decision than purchasing a fully renovated property. Here’s why:
Lower Initial Assessment – Property taxes are based on the assessed value of the home. If you buy a newly renovated home, its higher market value results in a higher tax assessment.
Delayed Reassessment – If you purchase an older home and renovate it, the property’s new value may not be reassessed immediately, allowing you to enjoy lower property taxes for a period before MPAC catches up.
Strategic Renovations – Certain upgrades, like kitchen remodels or energy-efficient improvements, may increase property value without immediately triggering a reassessment.
However, homeowners must consider hidden costs, such as higher renovation expenses and permit requirements. Medvisory Realty can help investors evaluate whether a teardown or renovation investment is financially advantageous.
Making Smart Real Estate Decisions in Toronto
For savvy investors and homebuyers, understanding these financial implications can create opportunities—whether through purchasing a home that requires renovation, leveraging tax-efficient strategies, or seeking expert guidance to minimize costs. Medvisory Realty provides buyers with expert insight, helping them navigate Toronto’s tax landscape while making smarter real estate investments.
By staying informed and strategic, buyers can maximize long-term gains while minimizing unnecessary tax burdens in Toronto’s evolving real estate market.