Advice For Buyers

If you’re shopping for a home in Toronto over $3 million, you’re not just buying into a neighbourhood—you’re buying into a tax bracket.

Between the provincial land transfer tax and Toronto’s own municipal land transfer tax, high-end buyers are paying some of the steepest closing costs in the country. And now, with talk of even higher taxes on “luxury” homes, the $3M line has become a psychological—and financial—wall for a lot of buyers.

Let’s break down what’s really going on at the top end of the market, and what it means if you’re buying or selling above $3M in Toronto.

Toronto’s Luxury Land Transfer Tax in Plain English

Toronto is unique in Canada because you pay two land transfer taxes on a purchase:

1. Ontario’s provincial land transfer tax (LTT)
2. Toronto’s municipal land transfer tax (MLTT)

Both are tiered taxes—different portions of the purchase price are taxed at different rates. For provincial LTT, Ontario applies: 0.5% on the first $55,000, 1% up to $250,000, 1.5% to $400,000, 2% up to $2,000,000, and 2.5% on anything over $2,000,000.

Toronto’s municipal tax mirrors those lower tiers, but as of January 1, 2024, the City introduced new luxury brackets for high-value homes:

• 3.5% on the portion between $3M–$4M
• 4.5% on $4M–$5M
• 5.5% on $5M–$10M
• 6.5% on $10M–$20M
• 7.5% on $20M+

These luxury rates apply only to properties with at least one, and not more than two, single-family residences—think detached, semi, or certain townhomes—inside Toronto’s boundaries.

So if you’re buying in Forest Hill, Lawrence Park, the Bridle Path, or a renovated detached in central Toronto, you’re very much in luxury-tax territory.

How Much Tax Are We Actually Talking About?

To keep things simple, let’s look at approximate totals for a buyer in Toronto (provincial + municipal combined), using the current bracket structure:

• $3,000,000 purchase
  • Roughly $61,500 in Ontario LTT
  • Roughly $61,500 in Toronto MLTT
  • Total: about $123,000 in land transfer tax
• $4,000,000 purchase
  • Roughly $86,500 in Ontario LTT
  • Roughly $96,500 in Toronto MLTT (thanks to that 3.5% luxury tier)
  • Total: about $183,000 in land transfer tax
• $5,000,000 purchase
  • Roughly $111,500 in Ontario LTT
  • Roughly $141,500 in Toronto MLTT
  • Total: about $253,000 in land transfer tax

These are ballpark figures based on the official rate structure from the Province and the City; every deal should still be run through a lawyer or a reliable calculator for precise numbers.

The takeaway? Once you cross into the $3M+ bracket, your land transfer tax bill alone can rival the price of a condo parking spot… or three.

Why $2.99M Has Become the New Line in the Sand

Here’s what we’re seeing on the ground: buyers are pushing hard to cap their purchase at or below $3M.

When you know that every extra dollar above $3M gets hit with a 3.5% municipal luxury levy on top of the provincial 2.5% over $2M, it’s no surprise that:

• Some buyers are setting their saved searches to $2.8M or $2.9M max
• Offer strategies are being crafted very intentionally around “Do not cross $3M”
• Properties listed just above $3M are facing more resistance—and sometimes longer days on market—than those priced just under

From our side at TorontoLivings, we’ve seen more purchasers push to get their luxury house “until $3 million.” That behaviour lines up with what other brokers and analysts are calling “threshold compression”—activity bunching just below key policy lines.

How Sellers Are Responding

Sellers above $3M are adapting too:

• Pricing homes at $2,995,000 instead of $3,050,000
• Being more open to offers just under $3M to keep buyers out of the higher tax band
• Investing more in presentation and marketing to justify a price that does cross the line

When tax policy starts driving list prices and offer strategies, it’s a sign the luxury LTT isn’t just a background closing cost anymore—it’s actively shaping the market.

If you’re thinking about selling in that range, it’s worth a conversation about strategy—especially around pricing. Our Sell Higher guide walks through how we position listings in shifting markets like this.

Did the Luxury Tax Actually Raise Revenue—or Just Headaches?

The stated goal of Toronto’s luxury MLTT changes was to raise more money from a relatively small slice of high-value deals. Law firms and policy observers noted that City Hall was trying to plug budget gaps, alongside other tools like higher parking fees and calls for new revenue sources.

On the flip side, industry groups—especially the Toronto Regional Real Estate Board (TRREB)—have been blunt: they argue that piling more tax onto home purchases, particularly in a city already dealing with affordability issues, could drive buyers away and reduce transaction volume at the top end.

You don’t have to read the full policy submissions to see the impact. Just look at:

• Slower absorption above $3M in certain neighbourhoods
• More buyers comparing “Toronto vs just outside of Toronto”
• A growing sense, especially among move-up buyers, that “maybe we don’t need that extra bedroom if it comes with six-figure tax”

We’ve seen this play out before with other city policies—think of the Toronto Vacant Home Tax and how it changed the calculus for certain owners. The luxury LTT is doing something similar, just at a different price band.

And Now… Talk of Even Higher Taxes on “Luxury” Homes

Just as the market was getting used to the new 2024 brackets, the conversation moved again.

Recent reporting has highlighted that Mayor Olivia Chow is proposing to increase the tax rates on higher-value home sales even further, including those between $3M and $4M and above. In broad strokes, the idea is to bump the municipal luxury rates by roughly 0.9 to 1.1 percentage points in the upper tiers, pushing the MLTT on a $3M–$4M home toward the mid-4% range.

The pitch from City Hall is simple: these are the wealthiest buyers in the city, and asking them to contribute more helps fund services that everyone uses.

TRREB’s counter-argument is just as simple: stacking more tax on already expensive homes risks slowing the market and pushing activity outside city limits.

Why This Matters Even If You’re “Just Browsing”

Even without exact implementation details, the message to luxury buyers is loud and clear:

• Taxes at the top end are not done evolving
• The $3M line is likely to become even more sensitive over time
• If you’re considering a long-term primary residence in the $3M–$5M range, you’ll want to model closing costs carefully

It also means that timing—and where you buy—matters more than ever.

How Toronto’s Luxury Tax Compares to Buying Just Outside the City

Here’s where things get interesting.

If you buy in Oakville, Mississauga, Vaughan, Markham, or other 905 municipalities, you still pay Ontario’s provincial LTT, but you do not pay a municipal land transfer tax like Toronto’s.

On a multi-million-dollar purchase, skipping the municipal side can mean tens of thousands of dollars in savings.

Roughly speaking:

• A $3M home in Toronto = two layers of land transfer tax
• A $3M home in Oakville or Vaughan = one layer (provincial only)

Of course, that doesn’t mean everyone should default to the 905. You’re also trading:

• Commute time
• School options
• Neighbourhood character
• Access to downtown amenities

But it does explain why we’re seeing some luxury-segment buyers:

• Cross-shopping central Toronto vs. Oakville waterfront, or
• Looking at newer builds in Vaughan instead of a slightly dated detached in the city core

If you’re weighing those trade-offs, our Buy Better guide and Toronto Real Estate Market Update hub are great places to start mapping out the options.

What Buyers Over $3M Should Be Thinking About

If you’re shopping above $3M in Toronto, here are a few practical moves:

1. Model the Total Cost, Not Just the Purchase Price

Run scenarios at:

• $2.95M
• $3.05M
• $3.5M

You’ll see how quickly the combined land transfer taxes add up as you cross different thresholds. A good real estate lawyer or a reputable online calculator can give you precise numbers.

2. Build the Tax Into Your Negotiation Strategy

If you’re hovering around $3M, consider:

• Structuring offers to stay under the threshold
• Highlighting the tax jump when negotiating with the seller
• Looking slightly under your max budget, knowing the tax bill will fill in the gap

We’re seeing many buyers treat the luxury LTT as part of the “effective price” of the home—not an afterthought.

3. Think Long-Term, Not Just “Sticker Shock”

Yes, the upfront tax is painful. But if you’re buying a home you’ll live in for 10–15 years, the question becomes:

“Is this the right home, in the right area, for the life I want… even with the tax?”

That’s where conversations about schools, commute, future renovation potential, and resale come into play. We’re big believers in matching the home and the life, not just the budget.

What Sellers Above $3M Need to Watch

On the selling side, the luxury LTT changes should play into your pricing and marketing decisions.

1. Pricing Around the Threshold

If your home’s fair-market value is somewhere between $2.9M and $3.2M, the difference between listing at $2,995,000 vs $3,099,000 is no longer just a rounding error—it’s a psychological barrier for buyers who’ve already run the tax math.

A thoughtful pricing strategy can:

• Expand your buyer pool
• Reduce friction during negotiations
• Shorten days on market in a segment that’s naturally thinner

2. Justifying a Price Above $3M

If you are clearly above the line—say in the $3.5M+ range—your marketing needs to answer:

• “Why this house?”
• “Why this neighbourhood?”
• “Why is it worth the extra tax, not just the extra price?”

This is where high-quality visuals, floor plans, neighbourhood storytelling, and a strong digital strategy matter. You’re not just selling a house—you’re selling the argument that this specific property is worth carrying the tax burden.

If you’re curious how we approach that, our Sell Smarter page walks through our system for maximizing value in markets exactly like this.

Final Thoughts: Is Toronto’s Luxury Market Adapting… or Migrating?

Luxury buyers in Toronto are facing a triple reality:

1. High base prices for quality homes
2. Stacked land transfer taxes (provincial + municipal, with luxury tiers over $3M)
3. Talk of even higher rates on “luxury” properties going forward

Some will adapt—tightening their search to just under key thresholds, negotiating harder, and focusing on homes they’ll keep for the long haul.

Others will migrate—to neighbouring municipalities with similar homes but lighter tax loads.

Either way, if you’re buying or selling above $3M in Toronto, this isn’t background noise anymore. It’s a core part of your strategy.

If you’re trying to make sense of your own numbers—whether you’re on the buy side or the sell side—feel free to reach out. And if you want to keep tabs on how policy and market trends evolve from here, make sure you’re subscribed to our market updates so you’re never guessing about what City Hall (or the market) is planning next.