Humber/Ontario Real Estate Course 2 Exam Practice

Which of the following statements about the provincial land transfer tax is correct?

1. Typically payable when a purchase agreement is signed

2. Varies as a flat fee regardless of sale price

3. One of several closing costs paid by the buyer

4. Refundable for first-time home buyers

5. Pays for legal fees associated with land registration

6. Funded by the seller

The correct answer is: One of several closing costs paid by the buyer

The correct statement about the provincial land transfer tax is that it is one of several closing costs paid by the buyer (Option C). The land transfer tax is a mandatory cost associated with buying a property in Ontario. It is calculated based on the property's purchase price and needs to be paid before the property can be legally transferred to the new owner. This cost is typically one of the buyer's responsibilities in the closing process. Options A, B, D, E, and F are incorrect: A. The land transfer tax is usually paid on the closing date, not when the purchase agreement is signed. B. The land transfer tax amount is not a flat fee; it is calculated based on the purchase price of the property. D. The land transfer tax is not refundable for first-time home buyers. E. The land transfer tax does not pay for legal fees associated with land registration; it is a separate cost. F. The land transfer tax is usually paid by the buyer, not the seller.