Advice For Buyers

Toronto City Council has officially approved another increase to the city’s luxury land transfer tax — a move that will directly impact high‑value home buyers and, indirectly, sellers navigating Toronto’s upper‑end market.

While the change won’t take effect immediately, it adds yet another layer of cost to buying luxury real estate in Toronto, a city that already has one of the most expensive closing‑cost environments in the country. Let’s break down what was approved, when it kicks in, and what it realistically means for buyers and sellers moving into 2026.

Toronto City Council Has Approved Another Luxury Land Transfer Tax Hike

Earlier this week, Toronto City Council voted to increase the municipal luxury land transfer tax on higher‑priced homes. The measure passed as part of the city’s broader effort to generate additional revenue without raising property taxes across the board.

It’s important to underline one key point right away: these new rates do not apply immediately. The updated luxury land transfer tax structure will take effect in April 2026, giving buyers, sellers, and developers a window to plan ahead.

Toronto already charges a municipal land transfer tax on top of Ontario’s provincial land transfer tax. This latest change applies only to the city portion — but at luxury price points, that distinction still translates into significant dollars.

How the New Luxury Land Transfer Tax Works (Graduated Rates Explained)

The approved increase applies to homes with purchase prices above $3 million and works on a graduated scale. That means different portions of the purchase price are taxed at different rates, rather than the entire value being taxed at a single flat rate.

Once implemented in April 2026, the new municipal luxury land transfer tax rates will be:

• $3M to $4M: 4.40%
• $4M to $5M: 5.45%
• $5M to $10M: 6.5%
• $10M to $20M: 7.55%
• Over $20M: 8.6%

These figures represent increases of roughly 0.9 to 1.1 percentage points across the luxury brackets compared to the previous structure.

What This Actually Costs: Real‑World Luxury Home Examples

To put real numbers behind the policy change, below are illustrative before‑and‑after comparisons showing how the municipal luxury land transfer tax changes once the new rates take effect in April 2026. These examples are simplified for clarity and assume the same graduated structure before and after the increase.

Important note: These figures focus only on Toronto’s municipal land transfer tax, not the Ontario land transfer tax. Numbers are approximate and meant for planning conversations — not legal advice.

Buying a $3,500,000 Home in Toronto

Before April 2026 (previous luxury rates – approx.)

• Estimated municipal LTT: ~$111,000

After April 2026 (new luxury rates)

• Estimated municipal LTT: ~$138,000

Difference: ~$27,000 more in city land transfer tax

This is where the increase is felt most sharply. Buyers hovering just above $3M may rethink pricing, negotiate harder, or focus on properties that stay below the luxury threshold altogether.

Buying a $5,000,000 Home in Toronto

Before April 2026 (previous luxury rates – approx.)

• Estimated municipal LTT: ~$200,000

After April 2026 (new luxury rates)

• Estimated municipal LTT: ~$245,000

Difference: ~$45,000 more in city land transfer tax

At this level, buyers are typically more flexible — but a $40K–$50K jump in closing costs still factors into overall value discussions, renovation budgets, or comparisons with non‑Toronto options.

Buying a $10,000,000 Property in Toronto

Before April 2026 (previous luxury rates – approx.)

• Estimated municipal LTT: ~$525,000

After April 2026 (new luxury rates)

• Estimated municipal LTT: ~$650,000

Difference: ~$125,000 more in city land transfer tax

At the ultra‑luxury end, the tax increase is unlikely to derail a purchase — but it is no longer a rounding error. On eight‑figure deals, these changes meaningfully affect total acquisition costs and require more deliberate planning.

What This Means for Luxury Buyers — Now vs. After April 2026

Timing is going to matter more than ever.

Buyers who are actively searching now and able to close before April 2026 will avoid the increased rates altogether. As that date approaches, we expect to see more attention paid to closing timelines, especially for resale homes already trading near luxury thresholds.

For buyers planning purchases in 2026 and beyond, budgeting accuracy becomes critical. Closing costs in Toronto were already substantial — this change simply raises the stakes.

What This Means for Sellers Heading Into 2026

For sellers, the tax technically isn’t their bill — but it absolutely influences buyer behaviour.

Higher transaction costs can affect:

• How aggressively buyers negotiate
• How long buyers take to make decisions
• Which price brackets see the most activity

Some sellers may choose to list earlier to capture buyers motivated to close before April 2026, while others may need to price more strategically to account for increased buyer costs.

Toronto vs. the 905: The Tax Gap Keeps Growing

One of the quiet side effects of this change is how much wider the gap becomes between Toronto and surrounding municipalities.

Buyers comparing Toronto to areas like Oakville, Vaughan, or Mississauga will once again notice that those markets do not charge a municipal land transfer tax. On luxury purchases, that difference alone can amount to six figures.

This doesn’t mean Toronto loses its appeal — but it does mean the decision calculus is shifting.

The City’s Argument — And the Market’s Pushback

Supporters of the increase argue the tax targets a small segment of buyers who can afford to contribute more to city finances. From the City’s perspective, it’s a progressive approach that limits the impact on everyday homeowners.

Critics, including industry groups, counter that repeated transaction‑based taxes risk dampening market activity and making Toronto less competitive long‑term — especially at a time when buyers have more geographic flexibility than ever.

As with many policy decisions, the truth likely sits somewhere in the middle.

What Buyers and Sellers Should Be Thinking About Right Now

Whether you’re buying or selling in the luxury segment, planning ahead matters:

• Understand how April 2026 changes your closing costs
• Stress‑test your budget beyond the purchase price
• Factor timing into your broader strategy

These aren’t reasons to rush or panic — but they are reasons to be informed.

Looking for a Luxury Home in Toronto?

Final Thoughts: Another Cost Layer in an Already Expensive City

Toronto remains one of the most desirable real estate markets in the country, but it’s also becoming one of the most complex from a cost standpoint.

The newly approved luxury land transfer tax hike, effective April 2026, adds another variable buyers and sellers need to account for. With the right planning and guidance, it’s manageable — but ignoring it isn’t an option.

If you’re considering a luxury purchase or sale and want to understand how these changes affect your specific situation, this is a conversation worth having sooner rather than later… send us a message below!