Alberta has no land transfer tax: what you pay instead

There is no land transfer tax in Alberta

Alberta doesn't charge a land transfer tax. There's no provincial one and no municipal one, whether it's your first purchase or your fifth. If a calculator asked for your province and then showed you a four-figure tax bill, it's either wrong or set to Ontario.

This is one of the few large cash differences between buying in Alberta and buying almost anywhere else in Canada. It shows up in your cash to close, which is the part of a purchase you can't finance and the part that stops more deals than the mortgage does.

What Alberta charges instead are Land Titles Office registration fees. You do pay them, but they're a small fraction of what a land transfer tax costs.

What you pay instead

The Alberta Land Titles Office charges 2 separate fees under sections 64.1 and 102.1 of the Land Titles Act:

• A transfer of land fee, based on the purchase price or the assessed value of the property, whichever is greater.
• A mortgage registration fee, based on the principal amount of the mortgage.

Both use the same formula: $50 plus $5 for every $5,000 of value, or part thereof.

"Or part thereof" means the value is split into $5,000 units and any partial unit rounds up to a full one. A $502,000 purchase is charged on 101 units, not 100.4.

Example: a $500,000 purchase

Say you buy a $500,000 home with a $400,000 mortgage (20% down).

Transfer of land fee. $500,000 divided by $5,000 is 100 units. 100 times $5 is $500. Add the $50 base: $550.

Mortgage registration fee. $400,000 divided by $5,000 is 80 units. 80 times $5 is $400. Add the $50 base: $450.

Total: $1,000.

That's the full provincial cost of registering the purchase and the mortgage. You pay it through your lawyer at closing, along with the legal fee and other disbursements, and it appears on your statement of adjustments.

A smaller mortgage means a smaller fee. The same $500,000 home with a $250,000 mortgage carries a $550 transfer fee and a $300 registration fee, for $850. A cash purchase pays only the transfer fee.

What the same purchase costs in other provinces

| Where | Tax or fee on a $500,000 purchase | |---|---| | Alberta | About $1,000 in Land Titles registration fees, including the mortgage | | Ontario | Roughly $6,475 in provincial land transfer tax | | Toronto | Roughly $12,950 (the provincial tax plus the municipal one) | | British Columbia | Roughly $8,000 in property transfer tax |

These figures are before first-time buyer rebates. Ontario and British Columbia offer rebates because they have a tax to rebate. Alberta has no tax, so it has no rebate either.

If you're moving from Ontario or British Columbia, this is usually the second-largest number in the move, after the difference in home prices. (Alberta has led the country in net interprovincial migration for 17 consecutive quarters, so plenty of people are doing this math.)

Alberta doesn't charge PST on the insurance premium

Alberta has a second saving that matters most to first-time buyers.

If your down payment is under 20%, your mortgage is default-insured, and a premium of 2.80% to 4.00% of the loan is added to the balance. You don't pay the premium in cash, because it's financed.

In Ontario, Quebec, Saskatchewan and Manitoba, provincial sales tax on that premium is due in cash at closing, and it can't be added to the mortgage. On a $475,000 purchase with 5% down, the premium is roughly $18,000 and the Ontario PST on it is around $1,450, due in cash on possession day.

Alberta doesn't charge it. When you're pulling together every dollar of cash to close, that can decide whether a purchase works.

What else is in your cash to close

Since there's no tax to budget for, here's what you do need to plan for on a typical Alberta purchase:

• Legal fees and disbursements: commonly $1,200 to $2,000, including the lawyer's fee, title searches and the Land Titles fees above.
• Title insurance: often $250 to $400, and lenders often require it.
• Home inspection: $400 to $700. It's optional, and it's almost always worth doing.
• Appraisal: $350 to $600 when the lender orders one and doesn't cover the cost. It's often waived on a straight switch.
• Property tax and utility adjustments: you pay the seller back for the part of the year they've already paid. Depending on your possession date, this can run from several hundred to a couple of thousand dollars.
• Moving, utility hookups and the first month of everything.

A reasonable working number for closing costs in Alberta is 1.5% of the purchase price. On a $500,000 home, that's about $7,500, which covers the list above with room to spare. National articles often tell Canadians to budget 3 to 4%. That advice assumes a land transfer tax, and following it in Alberta means setting aside cash that could have gone into your down payment.

For the figure on your own purchase price and mortgage amount, the Alberta land transfer tax calculator applies the Land Titles formula directly, including the rounding.