Land Transfer Tax: What is it and how much will it cost me?

In Manitoba, real property (meaning land and buildings of the land), are regulated by a Land Titles System. This system tracks ownership of the land, what is registered on the land, and how much the land is bought and sold for to name a few of its responsibilities. Guaranteeing the accuracy of land ownership takes time and resources, which in part is paid through land transfer tax.

When land is transferred in Manitoba (with some exceptions) a tax must be paid. It is based on the fair market value of the land transferred. The greater the fair market value of the land the higher the tax.

The tax is calculated as follows:

-          On the first $30,000.00 there is 0% land transfer tax payable;

-          On the next $60,000.00 there is 0.5% payable;

-          On the next $60,000.00 there is 1% payable;

-          On the next $50,000.00 there is 1.5% payable; and

-          Finally, on any value above $200,000.00 there is 2% payable.

For example, if a person sold a property for $90,000.00 the total land transfer tax is $300.00 because .5% of $60,000.00 is $300.00.

If land is gifted meaning no money was transferred for it, land transfer tax is still payable based on the fair market value of the land.

There are some situations where a buyer is exempt from paying land transfer tax with the two most common being Spousal Transfers and Transfers of Farmland.

It is recognized that Spouses may often own separate properties and need their name transferred onto or off of the property in separations. Because this is so common there is no land transfer tax payable for the transfer so long as the land is not considered a commercial property.

Farmland is also exempt from land transfer tax so long as it is being transferred to a farmer. A farmer is defined in The Farm Lands Ownership Regulations, which states that a farmer is a person who earns 50% or more of their income from farming and spends at least 40% of their working time actively farming.

When purchasing a property, land transfer tax is the responsibility of the buyer and must be paid at the same time the land is transferred. Therefore, the purchaser needs to have money saved to cover this additional cost when purchasing property.

If a reader wishes to know more about land transfer tax and when it is payable, please contact our office and one of our lawyers would be happy to be of assistance.