Humber/Ontario Real Estate Course 4 Exam Practice

What kind of fee is the provincial land transfer tax in real estate transactions?

1. A fee imposed before signing the sale agreement

2. A flat rate independent of sale amount

3. Part of several closing expenses borne by the buyer

4. Refundable for all first-time home buyers in full

5. A seller's responsibility during closing

6. A temporary payment requirement

The correct answer is: Part of several closing expenses borne by the buyer

The provincial land transfer tax is categorized as a fee that is part of the closing expenses associated with a real estate transaction, which is typically borne by the buyer. This tax is assessed on the purchase price of the property and must be paid at the time of the closing. It is one of the several costs involved in completing the sale, alongside other fees such as legal fees, disbursements, and other closing costs. This understanding is essential, as it highlights the nature of the transaction and the financial responsibilities of the buyer. While buyers may be eligible for rebates or exemptions, such as for first-time home buyers, this does not alter the fact that the tax is generally a financial obligation incurred by the buyer at the closing stage of the transaction.