Beware of Banks Offering to Pay Land Transfer Tax

Posted on November 23, 2007 at 11:47 am
Filed Under Mortgage Planning

Both BMO and TD Canada Trust have announced that they will pay the land transfer tax for their new clients, within specific criteria.

On the surface, this offer sounds like a great deal to a Canadian consumer, but as you’ve undoubtedly heard “If it’s too good to be true, it probably is”. In most cases, but not necessarilly all, the banks will in fact pay for your land transfer tax up to a maximum amount, but they will also generally charge you a higher interest rate to do so. If you don’t want to pay that interest rate, then you won’t have your taxes paid for you.

Your Take-Away: This is an appealing offer to anyone, especially those of us in the midst of a move with the potential of a new tax taking a large portion of our planned down payment. That said, if you are entertaining this offer, make sure you read the fine print and don’t simply just opt for the apparent “freebie”. You may end up having your land transfer taxes paid on your behalf, but if you run the numbers, you are probably actually paying for them yourself over the course of the next five years based on the additional interest you will be responsible for. After all, when have you ever known the major banks in Canada to just “give money away”?

Although this offer is very appealing, don’t stop shopping the market to look at what is available to you at this time, and don’t just assume it’s a great deal. It very well may be, but in most cases, you may be getting hosed over the course of next five years.

Until next time, have a Fantastic Friday.

Chris

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