Subject to adoption of the proposed bylaw (which is expected to occur on or before December 31, 2011), the city of Montréal will, effective January 1, 2012, increase to 2.5% the marginal rate used to calculate the duties imposed on the transfer of immovables in respect of that portion of the basis of imposition which exceeds $1,000,000.
In the province of Québec, duties are imposed on the transfer of an immovable property, such as a sale, a contract of lease for a term exceeding 40 years or the establishment of emphyteusis.
Every municipality in Québec must collect transfer duties on the transfer of any immovable situated within its territory. The transferee of the immovable is liable to the municipality for the payment of such duties as of the date of the transfer registration.
The basis of imposition for transfer duties is determined based on the greater of the following amounts:
- the consideration furnished for the transfer of the immovable;
- the consideration stipulated in the deed of transfer of the immovable; and
- the market value of the immovable at the time of transfer.
Subject to adoption of the proposed bylaw, the duties imposed on the transfer of immovables situated within the city of Montréal's territory only, will be, as of January 1, 2012, calculated as follows:
|Basis of Imposition
|Portion not exceeding $50,000
|Portion exceeding $50,000 but not exceeding $250,000
|Portion exceeding $250,000 but not exceeding $500,000
|Portion exceeding $500,000 but not exceeding $1,000,000
|Portion exceeding $1,000,000*
* Currently, the marginal rate for the portion exceeding $1,000,000 is 2% within the territory of the city of Montréal. In the other cities of the province of Québec, the marginal rate applicable to the basis of imposition which exceeds $250,000 is 1.5%, with no increased rate being applied on the portions exceeding $500,000 or $1,000,000.
For example, the "welcome tax" resulting from the transfer of an immovable situated in the city of Montréal with a basis of imposition of $2,000,000 would now be as follows:
|$50,000 x 0.5%
|$200,000 x 1.0%
|$250,000 x 1.5%
|$500,000 x 2.0%
|$1,000,000 x 2.5%
We recommend reviewing your transactions scheduled to occur in the coming weeks in light of this new marginal rate.
The Act respecting duties on transfers of immovables provides for certain exemptions from the payment of transfer duties.
Authored by Anthony Arquin.
If you have any questions regarding the foregoing, please contact Anthony Arquin (514.841.6426), Elias Benhamou (514.841.6427), or Nicolas X. Cloutier (514.841.6535) in our Montréal office.
Davies Ward Phillips & Vineberg LLP is an integrated firm of more than 240 lawyers with offices in Toronto, Montréal and New York. The firm is focused on business law and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its clients, regardless of borders.
The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.