Some good news for first-time homebuyers looking at purchasing homes or condos in Ontario outside of the city of Toronto: provincial Finance Minister Charles Sousa has announced these buyers will be eligible for a rebate of up to $4,000 in provincial land transfer tax. That doubles the maximum tax rebate currently offered to first-time buyers. Meantime, for homes with a purchase price of more than $2-million, the land transfer tax rate will be hiked 0.5 per cent to a total of 2.5 per cent.
The announcement, made Monday afternoon, was part of the Ontario government’s fall economic statement. These measures are a way for the government to level the playing field within red-hot markets, where buyers are now faced with brand new federal mortgage rules that make it more challenging to secure a property with less than 20 per cent down.
The Nitty Gritty Behind These Tax Breaks
The Ontario Real Estate Association had asked the provincial government to expand the land-transfer tax rebate program for first-time homebuyers to make it easier for them to get into the market. Sousa’s statement reads that home ownership is a key factor in long-term financial stability for many individuals.
By increasing the land-transfer tax rate for those purchasing luxury homes, the government expects to bring in about $105-million each year. This will fund the increased rebate and also boost that particular tax revenue by 15 per cent from the original forecast released in February’s provincial budget.
The government has also announced it is freezing property tax on apartment buildings. A review is also planned on how this tax affects rental market affordability. This and all of the other changes will come into effect on January 1st 2017.
While the rebate will help some first-time buyers, it won’t necessarily make the difference between being able to buy and continuing to rent for others. It also won’t aid with cash flow when paying down a mortgage. That’s why it’s so important to find the absolute best rate for your mortgage. Click here to find the lowest fixed and variable rates in your area.
If I’m Not a First-Time Buyer?
For seasoned buyers, Ontario’s land-transfer tax is 0.5 per cent on the first $55,000 of a home’s purchase price, rising to 2.0 per cent for prices over $400,000. In Toronto specifically, the land-transfer tax is 1.0 per cent on the first $55,000 and 2.0 per cent thereafter. Currently, the city offers rebates of up to $3,725 for first-time buyers, who do not have to pay the municipal land transfer tax on properties that cost $400,000 or less.
Will this change help you to be able to purchase a home? Let us know in the comments below!