page contents
Wednesday , 29 March 2017
Toronto Real Estate Board to fight proposed new land transfer tax

Toronto Real Estate Board to fight proposed new land transfer tax

The City of Toronto is talking taxes these days. One of the more contentious is the first ever road toll in Canada, proposed by the mayor. It would cost drivers two dollars each time they took the Don Valley Parkway or the Gardiner Expressway. Hotel tax, alcohol tax, and the return of the vehicle ownership tax abolished by Rob Ford are some of the other sources of revenue being considered.

The one that has the Toronto Real Estate Board up in arms, however, is a proposed increase in the Toronto Land Transfer Tax. TREB has been calling for its outright abolition for years, so the prospect of an increase instead has the realtors group enraged. It says the proposed changes would cost the average home buyer $750 in additional LTT. The average LTT paid in Toronto is currently about $11,000.

Such an increase would contradict the recent move by the provincial government to increase the rebate it gives to first-time home buyers, according to TREB. That move was announced as proof of the government’s intent to make housing more affordable in Toronto. The rebate, which applies to the provincial Land Transfer Tax, would increase from $2,000 to $4,000, effective January 1, 2017. The rebate applies to the first $368,000 of the cost of a buyer’s first home. More than half of first-time home buyers in Ontario would pay no LTT as a result of the change.

proposed-land-transfer-tax-treb-toronto-real-estate-housing-first-time-buyer-provincail-government-rebate-condo-ca

What TREB says the City of Toronto is considering is charging a new LTT of 1.5 per cent on the portion of property valued at $250,000–$400,000,. Currently, the first $55,000 of value is taxed at 0.5 per cent, and the portion from $55,000 to $400,000 at 1.0 per cent. Anything above $400,000 is taxed at 2.0 per cent. Homes costing more than $2 million are subject to a rate of 2.0 per cent, which could rise to 2.5 per cent.

Another proposal being considered is that the City of Toronto harmonize its LTT rebate with the provincial government’s, so that a first-time buyer would be eligible for a rebate of $4,000 on a home valued up to $368,000. This would still be disadvantageous to the buyer, TREB says. Currently, the City’s maximum rebate is $3,725, which equates to the LTT payable on a home valued at $400,000. Increasing the rebate to $4,000 would not be enough to completely offset the additional new LTT rates.

The City is also considering the possibility of increasing the rebate to $4,475. This, says TREB, would represent the “status quo” for first-time homebuyers, as they would get a full refund on a home purchase of up to $400,000.

TREB says that City Hall should be focused on making home ownership more affordable, not less so, and it vows to participate in the upcoming budget consultations and raise its concerns about the proposed changes “if they move forward.”

Here is a comparison of the current LTT and the one being proposed, assuming a home with a price of $400,000.

Current

0 to $55,000: $55,000 x 0.005 = $275.00

$55,000.01 to $400,000: $344,999.99 x 0.01= $3,450.00

Total $3,725

Proposed

0 to $55,000: $55,000 x 0.005 = $275.00

$55,000.01 to $250,000: $194,999 x 0.01 = $1,949

$250,000 to $400,000:  $149,999.99 x 0.015= $2,249

Total: $4,473

About Josephine Nolan

Josephine Nolan is the chief editor of Condo.ca—Canada's Condominium Magazine. You can reach Josephine via our contact form. She reads all her mail.

Comments are closed.

Scroll To Top