All municipalities in Quebec impose a transfer duty, commonly
referred to as the "Welcome Tax", on real estate
acquisitions (subject to certain exemptions and exclusions). It is
thus important to understand the nature of this duty in order to
identify its impacts and plan your real estate transactions
This duty is not called a "Welcome Tax" for
hospitality reasons, but because the Minister of Municipal Affairs
who instituted it was named Jean Bienvenue ("bienvenue"
means "welcome" in English).
The collection of real estate transfer taxes by Quebec
municipalities has been obligatory since 1992. The applicable
statutory framework is comprised of the Act respecting Duties
on Transfers of Immovables and the Act respecting
This transfer duty is a direct property tax that applies to the
transfer of any real-estate property and is collected by the
municipality where the property is located.
The duty is payable by the acquirer of the property and is due
on the 31st day after the account therefor is sent out
by the municipality. It is generally done between the third and
sixth month following the registration and publication of the
notarized transfer deed.
Given the major financial impact that the Welcome Tax can have,
we recommend that you fully understand and anticipate this
additional cost of acquiring real estate. Straightforward tax
planning for real estate transfers can save you money.
Calculating the transfer duty
The Act respecting Duties on Transfers of Immovables
provides that the tax base for the transfer duty is calculated on
the basis of the greatest of the following amounts:
the amount of the consideration furnished for the transfer of
the immovable (i.e. the price paid);
the amount of the consideration stipulated for the transfer of
the immovable (i.e. the price specified in the transfer deed);
the amount of the market value of the immovable at the time of
its transfer (the standardized value of the property entered on the
municipal assessment roll).
The amount of the duty payable by the acquirer will be
calculated in accordance with the following rates applied to the
tax base as established above:
on that part of the basis of imposition which does not exceed
on that part of the basis of imposition which is in excess of
$50,000 but does not exceed $250,000: 1%;
on that part of the basis of imposition which exceeds $250,000:
As the transfer duty is calculated on the basis of the value of
the acquired property, it is important to identify what is actually
being transferred, as it could have a significant impact on the
amount of the duty to be paid.
Special provisions for Montreal
For acquirers of property in Montreal, there is an added surtax
on the transfer duty: any base amount in excess of $500,000 is
subject to an additional rate of 2.0%, and a base amount in excess
of $1,000,000 is subject to an additional rate of 2.5%.
Exemptions and exclusions
It should be noted that some real estate transfers are
specifically exempted or excluded from the transfer duty. Such is
the case for example where:
the transferee is a public body;
the transferee and the transferor are registered charities for
the purposes of the Taxation Act;
the transferred property is part of a registered agricultural
the transferor is an individual and the transferee is a legal
person of which at least 90% of the shares are owned by the
the tax base is less than $5,000;
the transfer is made to a relative who is a direct ascendant or
descendant of the transferor (other than a brother or sister), i.e.
a son, mother, spouse, father-in-law, daughter-in-law, grandfather,
It should also be noted that even where no transfer duty is
payable because of an exemption or exclusion, the municipality may
nevertheless impose a special duty of $200. Moreover, other special
duties are also provided for in the Act respecting Duties on
Transfers of Immovables.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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