Property transfer duties (Welcome tax)

Since January 1st, 1992, it has been mandatory for all Québec municipalities to levy a transfer tax on the transfer of any property or real estate situated on its territory.

For official purposes, please refer to the Act respecting duties on transfers of immovables (i.e.: Welcome tax), (RSQ c. D-15.1).

What is a real estate or property transfer?

A real estate transfer is defined as follows:

  • The transfer of ownership of property;
  • The lease of a property, provided that the period of lease exceeds 40 years;
  • The establishment of a long lease and transfer of rights of the lessee;
  • The property donation between living persons or following death, as gifts and bequests;
  • The succession of property;
  • The exchange of property;
  • The sale of property through foreclosure and seizure.

Real estate transfers do not include:

  • Transfers for which the sole purpose is to ensure the payment of a debt;
  • Retrocession by the creditor.

How is transfer tax calcultated?

The amount of the transfer duty is calculated on the highest of the following amounts:

  1. The selling price provided for the transfer of the property;
  2. The selling price stipulated for the transfer of the building;
  3. The market value of the property at the time of transfer.

The market value of property at the time of transfer is the product obtained by multiplying the market value entered on the assessment roll and its comparative factor.

Example: Value entered on the roll x comparison factor = market value

$ 100,000 x 1.19 = $ 119,000

The transfer tax is calculated based on the tax base at the following rates:

  1. On the portion of the tax base that does not exceed $ 50,000: 0.5%
  2. On the portion of the tax base that exceeds $ 50,000 but not exceeding $ 250,000: 1%
  3. On the portion of the tax base that exceeds $ 250,000: 1.5%

Example: A property purchased for $ 275,000, for which the assessment roll is $ 230,000 and the comparative factor is 1.19.

The highest of:

  1. The amount of the selling price provided ($ 275,000)
  2. The stipulated amount of the selling price ($ 275,000)
  3. Market Value ($ 230,000 x 1.19 = $ 273,700)

The taxable amount would therefore be $ 275,000

Is it possible to be exempted form transfer tax?

The main transfer tax exemptions are:

  1. When the transferee is a public body;
  2. When the transferred property is a mine;
  3. When the transferee states that the building will be part of a farm, registered in their name in accordance with law, in the year following the registration of the transfer;
  4. When the transferee’s business consists of lending money on security guarantees, and this under certain conditions;
  5. When the transfer is made between a corporation and a person controlling the shares of the said corporation;
  6. When the taxable amount is less than $ 5,000;
  7. When transferring a property to a corporation for which the transferor is a trust, and this under certain conditions;
  8. When transferring a building from an ascendant or descendant in a direct line (sale from father to son; from grandmother to granddaughter), between spouses, or to a transferee who is the spouse of the son, the daughter, father or mother of the transferor, or who is the son, daughter, parent or spouse of the transferor.

What is a spouse or common-law partner by law?

A spouse or common-law status constitutes two persons of different sex, or of the same sex, who, at the date of transfer, already live with each other and have lived with each other for the course of a 12-month period ending before the date of transfer, or are the parents of the same child.

Two persons of different sex, or of the same sex, living in a conjugal relationship with each other at any time before the date of transfer are deemed to live as husband and wife on that date, unless they live apart at this date because of the breakdown of their relationship, and whether this separation continued during a period of at least 90 days that includes that date.

How do we determine the mailing address for the transfer tax invoice?

The City of Huntingdon sends the transfer tax invoice to the home address on your notarized purchase contract. All correspondence (tax bill, recall notices, etc.) will be sent to this address. We recommend that you indicate your correspondence address in your notarized contract, or return the change of address notice attached to the bill of the transfer tax as applies.

For additional information

You can contact the Finance Department at 450 264-5389 ext. 223, or  tresorier@villehuntingdon.com.