One of the main factors, when choosing a new home, for many new home buyers is deciding which city is the right fit. Most people will choose a location close to their work. Others may pick a location associated with higher social status. Which ever factors go into your decision, property tax is something you should consider. Property and land transfer taxes are required to be paid to the owner on your Closing Date. The money is split between the city, region, and province. In this article, we will outline the property tax and land transfer taxes associated with purchasing a property in the Square One region of Mississauga.
When deciding which house to purchase, property tax should play a role in your decision. Mississauga has one of the lowest property tax rates in the Peel region. This makes it especially attractive for real estate investors who wish to invest in the GTA, to invest in properties near Square One.
In the Peel region, residential property tax is calculated using the following formula:
Assessed value x City residential tax rate
Assessed value x Peel residential tax rate
Assessed value x Provincial residential education tax rate
Your total residential property tax bill
Both the Peel and education rates are fixed rates at 0.424% and 0.212% respectively. Between Mississauga, Caledon, and Brampton; Mississauga has the lowest city tax rate.
The total property tax in Mississauga for a condo priced at $269,000 would be $2,492.68 in 2013.
A one bedroom apartment in the Marilyn Monroe Condos across from the Square One shopping centre is selling for $269,000. Let’s look at the property tax between this condo and a similarly priced condo in Brampton.
The total property tax for a condo in Brampton listed at $269,000 would be $3,110.53. As shown in the charts above, property taxes are significantly higher in Brampton as opposed to Mississauga. This makes it more attractive for investors to purchase a home in the Square One region of Peel.
Land Transfer Taxes
Another common tax which is associated with purchasing a new home is land transfer taxes. These costs are added to the purchase price of the home under the closing costs. In Ontario, land transfer taxes remain the same in every city except for Toronto, where additional costs are added. In Ontario land transfer taxes are:
– Up to $55,000 X 0.5 % of total property value
– From $55,000 to $250,000 X 1 % of total property value, less $275
– From $250,000 to $400,000 X 1.5 % of total property value, less $1525
– From $400,000 up X 2 % of total property value, less $ 3525
If we use the example above on a Mississauga condo, than the land transfer tax would be $269,000 x 1.5% – 1525 = $2,510. This cost will be included in the purchase price of the property. If however, the condo was located in Toronto, than an additional transfer tax will have to be included. Toronto home buyers will have additional taxes which are:
– 0.5% on first $55,000,
– 1% on next $345,000, and
+ 2% on portion over $400,000
Purchasing a $269,000 condo in Toronto will now have a Land transfer tax of:
0.5% x 55,000 = $275
0.01% x (269,000-55,000) = $2,140
$2,510 + $275 + $2,140 = $4,925
This may explain why Toronto homes are pricier than other homes in the GTA.
When deciding where you want to purchase a property and at what location you should purchase; the property and land transfer taxes should play a role in your decision as well. Mississauga has the lowest property tax rates in the Peel region, which is something to keep in mind when deciding on where to purchase your property.
About the Author
Allan is an experienced Chartered Accountant, CPA and tax expert. He has extensive experience in handling tax matters and has helped many business owners and individuals save on taxes. He continuously shares his expertise through presentations and other educational venues, whilst coming up with unique tax saving strategies.
You can follow any responses to this entry through the RSS 2.0 feed.