Humber/Ontario Real Estate Course 3 Exam Practice

Provincial land transfer tax is generally:

1. A geographical surcharge paid to the municipality

2. A non-variable fee independent of property value

3. Included in the closing costs borne by the purchaser

4. Non-refundable for new property buyers

5. Payable upon signing the purchase deal

6. Refundable entirely for first-time home buyers

The correct answer is: Included in the closing costs borne by the purchaser

The provincial land transfer tax is categorized as a tax that is typically included in the closing costs associated with a real estate transaction. This means that when a buyer purchases a property, they must account for various costs, and the land transfer tax is one of these costs that needs to be paid during the closing process. It's important to understand that this tax is often calculated based on the purchase price of the property, which means it can vary depending on the value of the home being bought. This reinforces the inclusion of the land transfer tax in the closing costs, as it is not a fixed expense but rather one that adjusts with the property value. The structure of closing costs often includes additional fees, such as legal fees, title insurance, and other associated costs of transferring ownership. Therefore, recognizing the land transfer tax as a component of these closing costs is crucial for buyers when preparing their budget for the purchase of a home. Understanding this concept in detail helps buyers better navigate their financial responsibilities when purchasing a property, ensuring they are fully informed about what to expect at closing.