Duties on Transfers of Immovables

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Higher Property Transfer Duties

On June 15, 2017, the Government of Québec adopted an Act mainly to recognize that municipalities are local governments and to increase their autonomy and powers. This Act amends section 2 of the Act respecting Duties on Transfers of Immovables. In fact, for the tax portion exceeding $500,000, it allows every municipality to set a rate higher than 1.5%. It should be noted that this additional rate may not exceed 3%, except for the City of Montréal. Every year, tax portions will also be increased based on the general Consumer Price Index for Québec.

As of January 1, 2018, municipalities may also impose new municipal taxes in their territory (must be direct taxes), as well as regulatory dues.

Calculation of transfer duties

The amount of transfer duties which are payable by the buyer of the property, is calculated in two steps:

First, the basis of imposition for transfer duties must be established, which will be the greatest of the three following amounts:

  • the price paid for the property acquisition, i.e. the purchase price (excluding GST and QST);

  • the amount of the consideration stipulated in the deed of sale (for example, the total selling price minus the value of furniture);

  • the property value entered on the property assessment roll multiplied by the comparative factor to take into account the real market value of the property. You should not look only at the comparative factor indicated on the tax account since it could differ from what is on the property assessment roll. The tax account does not reflect the comparative factor established for the first fiscal year to which the roll applies. The comparative factor may be amended for subsequent fiscal years.

Second, starting from the basis of imposition established in the first step, the following must be calculated for 2019.

For all the municipalities of Québec, except the City of Montréal:

  • 0.5% of the portion not exceeding $50,900;

  • 1% of the portion exceeding $50,900 but not exceeding $254,400;

  • 1.5% of the portion exceeding $254,400.

However, a municipality may, by by-law, determine a rate that is higher than 1.5% for any portion that exceeds $500,000, if a municipality issues a by-law to that effect. The rate set cannot exceed 3%.

For the City of Montréal:

  • 0.5% of the portion not exceeding $50,900;

  • 1% of the portion exceeding $50,900 but not exceeding $254,400;

  • 1.5% of the portion exceeding $254,400 but not exceeding $508,700;

  • 2% of the portion exceeding $508,700 but not exceeding $1,017,400;

  • 2.5% of the portion exceeding $1,017,400.

Example

A property is sold for $265,000. The value of the property entered on the property assessment roll is $260,000 and the comparative factor is 1.02. The basis of imposition is therefore established at $265,200, i.e. the highest of the sale price ($265,000) and the market value of the property (Value of the property entered on the property assessment roll multiplied by the comparative factor: $260,000 x 1.02 = $265,200). The transfer duties payable to the municipality will total $2,451.50, i.e.:

  • The first $50,900 multiplied by 0.5% = $254.50;

  • The following $203,500 multiplied by 1% = $2,035;

  • The $10,800 remaining multiplied by 1.5% = $162.

For more information on property transfer duties payable during a transaction, feel free to contact the municipalityconcerned. For the city of Montreal, contact the district concerned, dial 311 (on Montreal Island) or 514-872-0311 (elsewhere) or send an email.