What does real estate transfer tax mean?
A tax that Quebec governments collect whenever the title to a property on their jurisdiction is transferred to a new owner is known as a welcome tax, property transfer duties, or property transfer tax, among other names. Since 1976, this tax has made it possible for communities to raise more money.
Calculating the welcome tax
establishing the tax base
The greatest of the following values is the tax base used to determine the welcome tax:
- The cost to purchase a new house (before QST and GST)
- a building transfer’s set price, or the sum stated in the deed of sale
- The property’s market value is estimated (using the value on the assessment roll, multiplied by the comparative factor in effect in the municipality at the time of the transfer)
The comparison factor for this last choice is unique to each city and is updated annually. It is used to raise the sum to market value.
When and how to make payments
The municipality issues the transfer tax bill soon as the notarized act is complete. A notice of payment is often sent to buyers three to six months following the sale. The payment must be made in full within 30 days of receiving the bill.
Options for payment
Cities may have different rules on how new property owners must pay the welcome tax. It’s crucial to double-check the bill’s reference number, due date, and payment instructions. Interest will be applied to the total if the bill is not paid by the due date.
In general, it is feasible to pay:
- A partnering financial institution’s counter or online
- in person (debit, cheque, money order, cash)
- via mail (cheque or money order)
Special obligations and sanctions
The assessment roll has to be changed if there is a change in ownership. Additionally, the municipality may impose a special obligation of up to $200 even if the transaction is exempt from the transfer tax.
Penalties for non-compliant subsequent transfers are also outlined in the Act relating to duties on immovables transfers. Typically, a two-year ownership period is needed between each transfer to prevent this kind of circumstance.
