Renovate or Move? Why a Refinance Often Beats a Big Land Transfer Tax Bill
When your family outgrows your home, the instinct is to sell and buy something bigger. But before you do, it’s worth running the math on staying put and renovating instead, because the cost of moving in a market like Toronto is a lot higher than most people realize.
The hidden cost of moving: land transfer tax
Buying a bigger home in Toronto means paying both the provincial and the municipal land transfer tax. On a $1.2-million purchase, that combined tax can run north of $40,000, before you add realtor commissions, legal fees, and moving costs. That’s a huge amount of money that buys you nothing but the transaction itself.
The alternative: refinance and renovate
Instead, you can refinance your current home up to 80% of its value and use the funds to renovate, whether that’s an addition, a finished basement, or a full main-floor redo. You get the space you need, you stay in the neighbourhood you love, and you avoid tens of thousands in transaction costs.
Refinance or HELOC for the reno
For a defined project with a known budget, a refinance gives you the lowest rate on a lump sum. For a staged renovation where costs roll in over time, a HELOC’s flexibility can be the better fit. The right structure depends on your project and your current mortgage.
When moving still wins
Sometimes the location is wrong, or the lot simply can’t give you what you need, and moving is the right call. But run the renovation numbers first. When you factor in the land transfer tax you’d avoid, staying and improving often comes out well ahead, and you can usually line it up penalty-free at renewal.
Torn between renovating and moving?
Let’s compare the real cost of each, including the tax and penalty math. Sometimes the best new home is the one you already own.
Tyler Salmon, Mortgage Agent Level 2 (Licence #M21003803) · Tango Ontario (FSRA #13691)
