Quebec Land Transfer Tax (Duties on Transfer)

Quebec Land Transfer Tax (Duties on Transfer)

(la taxe de bienvenue/ la taxe de mutation/ Droits de mutation in French)

Also known as a welcome tax, the real estate transfer tax exists in Quebec since 1992 upon the adoption of the Act Respecting Duties on Transfers of immovables.  It was the minister Jean Bienvenue who recommended its application.

Quebec Land Transfer Tax is a non-recurring property tax, applied only once, and helps finance the city's expenses.

The real estate transfer tax is calculated from the highest amount among the purchase price (excluding GST/QST), the amount of the consideration stipulated in the deed of sale or the municipal evaluation multiplied by the comparative factor.

This tax must be paid within 30 days after the buyer receives its invoice sent from the municipality about several weeks or several months after the buyer signs the deed of sale.

The land transfer tax in Quebec is indexed to the consumer price index in Quebec. That means it gets higher each year.

Calculation of transfer tax

For almost all the municipalities of Quebec, except the City of Montreal, the calculation of this welcome tax is as follows:

* 0.5% of the portion not exceeding $52,800;

* 1% of the portion exceeding $52,800 but not exceeding $264,000;

* 1.5% of the portion exceeding $264,000.

However, a municipality may, by its by-law, determine a rate that is higher than 1.5% for any portion that exceeds $500,000. 

Therefore, when buying a property for a price greater than $500,000, it is important to check with the municipality concerned to see whether it has adopted such a by-law.

Also, according to the Act, the rate set cannot exceed 3%, except for the City of Montréal.

So, do you have more understanding about the famous "Quebec welcome tax" now?  At the end of this article, let us take a look at some examples of the calculation of the property transfer duty.

[For Brossard City]: the calculation of the welcome tax is based on the following rates:

*0.5% on the base amount not exceeding $52,800 ;

*1% on the portion between $52,800 and $264,000 ;

*1.5% on the portion between $264,000 and $500,000 ;

*3.0% on the base amount exceeding $500,000.

[For the City of Montreal]:

*0.5% of the portion not exceeding $52,800

*1% of the portion exceeding $52,800 but not exceeding $264,000

*1.5% of the portion exceeding $264,000 but not exceeding $527,900

*2% of the portion exceeding $527,900 but not exceeding $1,055,800

*2.5% of the portion exceeding $1,055,800 but not exceeding $2,041,900

*3.0% of the portion exceeding $2,041,900

Last but not lease, please feel reassured that the notary will also check with the municipality concerned and do the calculation of the amount of the welcome tax for the buyer.

Reference: OACIQ