Humber/Ontario Real Estate Course 3 Exam Practice

When is the provincial land transfer tax applied?

1. After the loan processing fee

2. Along with property insurance

3. During the closing transaction

4. Per renovation costs

5. Upon signing the transaction agreement

6. Well after the sale completion

The correct answer is: During the closing transaction

The provincial land transfer tax is applied during the closing transaction. This is the point at which the property title is officially transferred from the seller to the buyer, and all final financial transactions are completed. The tax is calculated based on the purchase price of the property and is typically due at the time of closing, meaning that buyers need to be prepared to pay this tax as part of their closing costs. Understanding the timing of the land transfer tax is crucial for real estate transactions, as it impacts the total amount of money a buyer will need to fulfill their obligations upon closing. This tax is distinct from other costs such as loan processing fees or property insurance, which occur at different stages of the transaction process, and it is not related to renovation costs or the transaction agreement signing. Furthermore, it's essential to handle the land transfer tax at closing rather than long after the sale is completed, as this could lead to legal and financial repercussions.