November 16, 2023

How to calculate the welcome tax

Buying a single-family or semi-detached home, plex or condo? Property transfer duties—often referred to as the welcome tax—are one of the inevitable costs you will need to pay. Read on to discover how to calculate the welcome tax, when it’s due, and how to pay it in a few simple steps.

What is the welcome tax?

Since 1976, all cities and municipalities in Quebec have been required to collect property transfer duties on transfers of ownership. These duties must be paid by the buyer, even if they already own a home in the same city.

In some cases, an exemption may be permitted, such as a transfer of ownership between spouses or between parents and their children. Only a notary can provide you with the specifics regarding your situation.

Calculating the welcome tax

Property transfer duties are calculated on the tax base that corresponds to the highest[1] amount among the following:

  • The consideration at the time of the transfer (purchase price)
  • The consideration on the deed of sale (purchase price)
  • The value of the building listed in the municipal assessment roll multiplied by an annual comparative factor

Once the tax base has been calculated, a provincial statutory tax rate is applied to different value brackets:[2]

  • 0.5% on the first $55,200
  • 1% on the portion between $55,200.01 to $276,200
  • 1.5% on the portion exceeding $276,200.01

Note: under the Act respecting duties on transfers of immovables, rates for buildings over $500,000 may be higher—up to 3% in certain cities or municipalities.[3]

When do I pay the welcome tax?

Property transfer duties are payable by the buyer in a single payment no more than 30 days after receiving the invoice. Most often, payment notification is sent between the third and sixth month following the appointment with the notary.[4]

How do I pay the welcome tax?

The payment method for property transfer duties varies depending on location. However, it is generally possible to pay:

  • Online through your financial institution’s website
  • By cheque or money order
  • In person with a debit or credit card or cash

Have the reference number on your invoice ready and pay it by the due date, or you will have to pay interest.

The welcome tax is one of the main closing costs when purchasing a property. To avoid unpleasant surprises, put together a detailed budget early on and include a cushion to cover any costs that might come up.

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See also:

School taxes: find out how much you need to pay

How to make an offer on a home

How do you pay off your mortgage faster?

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