Fiscal and Financial Planning Guide 2024-2025
Future owners > Property Transfer Tax
The Property Transfer Tax represents a relatively significant cost that is often overlooked when purchasing a property.
This tax is commonly referred to as the “welcome tax”. However, contrary to popular belief, it appears that this expression cannot be attributed to Liberal minister Jean Bienvenue, who was part of Robert Bourassa’s Liberal government. Indeed, although Finance Minister Raymond Garneau announced in his May 1976 budget that he would introduce a bill on property transfer tax, it appears that Minister Bienvenue did not participate in the discussions that led to this proposal.
Subsequently, on November 15, 1976, the liberal government was defeated by René Lévesque’s Parti Québécois, which passed the Loi concernant les droits sur les mutations immobilières on December 23, 1976.
Calculation of the Property Transfer Tax
When purchasing a property, whether new or not, the welcome tax is calculated on the higher of the following amounts:
- Purchase price stated in the purchase contract (excluding GST/QST, if applicable)
- Municipal evaluation (taking into account a comparative factor on the date of purchase)
Property Transfer Tax Rate
Under the Loi concernant les droits sur les mutations immobilières, the applicable tax rates for the first brackets are the same for all municipalities.
For tax brackets over $307,800, municipalities can set their own tax rates, generally up to a maximum of 3%.
The maximum rate for Montreal is 4% for homes valued at $3,113,001 and above.
Examples of Property Transfer Tax
Below are examples for six of Quebec’s major cities:
You will find at the following address a property transfer tax calculator for most major cities in Quebec: https://www.calculconversion.com/calcul-taxe-de-bienvenue-mutation.html
The property transfer tax bill is usually sent by the municipality a few weeks after the purchase of the property and is payable within 30 days of receipt.
Property Transfer Tax Exemption
In certain situations, there may be an exemption from property transfer tax. For example, when transferring ownership:
- Between spouses;
- In the event of separation or divorce, an exemption may be requested when transferring property to a former spouse, provided that the transfer is completed within certain time limits:
o Within 12 months of the date on which they began to live separately.
o Within 30 days of an agreement or judgment relating to the transfer.
- To an ascendant or descendant (e.g., grandfather, grandmother, father, mother, son, daughter, grandson, granddaughter);
- By an individual to a company in which they hold at least 90% of the voting shares and where the property is retained by the company for a period of at least 24 months after the transfer;
- By a company to an individual who has held at least 90% of the voting shares of the company throughout the last 24 months (or since incorporation if less than 24 months).
There are other situations where an exemption from transfer duties may be claimed. For every situation, it is important to check with your legal or tax advisor to see if the exemption applies. It should be noted that municipalities frequently verify the validity of exemptions claimed.
Law concerning real estate transfer duties: https://www.legisquebec.gouv.qc.ca/en/document/cs/D-15.1