In accordance with a law adopted by the Quebec government (An Act Respecting Duties on Transfer of Immovables - R.S.Q.,c. D-15.1), every municipality must collect a tax on the transfer of an immovable when a property located within the municipality changes hands.
Transfer tax revenue contribution to the financing of city activities
Following the acquisition of a property or part of a property, you will receive your transfer tax notice. All Québec municipalities have the obligation to charge this tax which is based on the value of the transaction (the highest value between the selling price, the consideration and the standardized value).
When is the ownership of a property considered to have changed hands?
The right of ownership of a property is transferred in the following cases:
- A contract to sell;
- A rental contract on a property exceeding 40 years;
- An emphyotic lease;
- The transfer of an emphyotic lease;
- A deed of gift;
- Transfer of ownership following the death of the (or one of the) owner(s).
Payment of the Transfer Tax
The transfer tax is levied on all property transfers. It is the purchaser (transferee) of the building who must pay the transfer tax. If there are a number of purchasers, they are held jointly responsible for the payment of the transfer tax.
The transfer tax is payable in a single instalment, to the municipality, within 30 days of the billing date.
The basis on which the tax is calculated corresponds to the greatest of the three following amounts:
- The sale price (compensation provided);
- The amount forming the basis for calculating the transfer tax as stated in the deed of sale (stipulated compensation);
- The market value of the property at the time of sale (value shown on the role multiplied by an adjustment factor).
The value used to calculate the transfer tax is either the amount actually paid or the value on the taxation role at the time of sale, whichever is the greater.
When a property constitutes an individual entry on the evaluation role, its market value is the value shown on the role at the time of the transfer multiplied by an adjustment factor.
For the year 2020: Market Value = Value on the Role x 1.04 (adjustment factor)
For property transfer tax purposes, the use of an adjustment factor as a means of tracking the property market is used each year to redress all the values contained on the role, as filed, so that they tend to reflect the true value of properties (100%).
The adjustment factor is set annually by the city evaluator from the median proportion and is the reciprocal of this proportion. The government analyses and approves the evaluator's calculations.
Method for calculating the property transfer tax
Calculation of transfer duties
- Base amount not exceeding $51,700: 0.5%
- 2nd portion between $51,700 and $258,600: 1.0%
- 3rd portion between $258,600 and $517,100: 1.5%
- 4th portion exceeding $517,100: 3.0%
Exemption from the transfer tax
A purchaser may be exempt from having to pay the transfer tax only in those cases set out in the Act. To benefit from this, the notary must mention in the deed of sale the relevant article of the Act that corresponds to the type of exemption requested.
Ville de Longueuil reserves the right to request the documents justifying the exemption mentioned in the deed of sale.
Main situations justifying an exemption:
- The taxable amount is less than $5,000;
- The transfer is to a direct family relative (sale from father to son, from grandmother to granddaughter);
- Transfer between life partners, whether they be married or living in a common law marriage. Same-sex partners are included in this section of the Act;
- When a property is transferred following the death of a person and this person is directly bound to the transferee;
- When the purchaser is a public organization in the sense of the Act;
- When the seller is a physical person and the purchaser is a corporation of which the seller owns at least 90% of the voting shares;
- The sale by the municipality of a property that has been acquired under the Act Regarding Municipal Industrial Property;
- Repossession of the property by a mortgage company, or other loan company.
It should be noted that the majority of purchasers whose transaction is exempt may still have to pay a supplementary fee.
Main situations that are not covered by an exemption:
- Sale between parties dealing at arm's-length;
- Sale between brothers and sisters, in favour of nephews, nieces, uncles and aunts;
- Sale between married couples who married more than 30 days after the date of a divorce judgement;
- Sale between common law spouses, who have separated because their union failed, where the sale takes place more than 12 months after this separation.
What is a supplementary fee and how is this applied in Longueuil?
This is a form of compensation billed exclusively to the purchasers whose transaction is exempt form transfer tax payments. The supplementary fee is payable in a single instalment within 30 days of the billing date. The supplementary fee came into force in Longueuil on December 17, 2002.
In accordance with the Act, the supplementary fee is $200, or the amount of the transfer tax if this is less than $200. Allowable exemptions for the supplementary are:
- when the taxable amount is less than $5,000;
- when a property is transferred with the death of a person and this person is directly bound to the transferee.
Please consult the Act to obtain the full text and complete list of exemptions.