What is the “welcome tax”?

Buying a house can be stressful. Not to mention that you also have to think about the welcome tax and other transaction-related taxes. Here is a small guide to the taxes that must be paid when you buy and own a house.

 

Welcome tax

The mere mention of this name is enough to make you cringe. Officially known as the “property transfer tax”, the welcome tax is payable as soon as you buy a new property.

How do you calculate this tax? The amount of transfer tax varies depending on the value of the property. And if you live in Montreal, the applicable rates are different.

The basis of imposition, usually the purchase price, is used to calculate the tax. However, the property’s market value is used as the basis of imposition when it is greater than the purchase price.

Except for Montreal, real estate transfer taxes are calculated throughout the province as follows:

In Québec City*

0.5% on the first $58,900
1% on the portion from $58,900 to $294,600
1.5% on portion from $294,600 to $500,000
2% on the portion from $500,000 to $1,000,000
2.5% on the portion from $1,000,000 to $2,000,000
3% on the amount exceeding $2,000,000
*Applicable for the year 2024.

In Laval*

0.5% on the first $58,900
1% on the portion from $58,900 to $294,600
1.5% on the portion from $294,600 to $585,200
2% on the portion from $585,200 to $1,170,500
3% on the portion exceeding $1,170,500
*Applicable for the year 2024.

In Montreal*

0.5% on the first $58,900
1% on the portion from $58,900 to $294,600
1.5% on the portion from $294,600 to $552,300
2% on the portion from $552,300 to $1,104,700
2.5% on the portion from $1,104,700 to $2,136,500
3.5% on the portion from $2,136,500 to $3,113,300
4% on the amount exceeding $3,113,000
*Applicable for the year 2024.

Is it possible to avoid paying the welcome tax?

Generally, no. However, there are some exceptions:

• Ownership can be transferred from one spouse to another. In the case of divorce, it is important that the transfer takes place before the divorce is finalized.
• Ownership can be transferred from one generation to the next within a family, such as between a mother and daughter or a grandfather and grandson. The transfer can also be exempt from transfer taxes if it takes place in the other direction as well.
• If the property’s value is less than $5,000.

It is always advisable to discuss your situation with a notary to ensure that everything is in compliance.

Source: https://montreal.ca/en/articles/how-property-transfer-duties-are-calculated-9279