Toronto Considering Raising Land Transfer Tax

Toronto considering raising land transfer tax

Toronto considering raising land transfer tax

In an effort to find new revenue streams, the City of Toronto is looking at raising the rate of its Municipal Land Transfer Tax (MLTT) on home sales. The proposed hike would add an additional $750 in closing costs to the average home, and would add an estimated $100 million to city revenues annually.

A one of a kind deal

Toronto is unique among Canadian cities in that it is the only one that charges a land transfer tax on real estate transactions. This is on top of the provincial land transfer tax. The city started charging MLTT on sales effective February 1, 2008. The tax is calculated on a graduating scale:

  • 0.5% on the first $55,000 of the sale price
  • 1% on any value between $55,000.01 and $400,000
  • 2% on the total amount exceeding $400,000.

Also read: The New Mortgage Rules: One Month Later

The proposal would increase the percentage charged on values between $55,000.01 and $400,000 to 1.5%.

At current rates, on a home valued at $500,000, the MLTT is $5,725. That’s the example cited on the City of Toronto’s website. But given that the average price for a Toronto home currently exceeds $700,000, most people pay more than that. The tax on an “average” priced detached home in the city – $1.3 million as of November – is $21,725, plus an additional $22,475 in provincial land transfer tax fees.

First-time homebuyers

The Ontario Real Estate Association (OREA) recently released a statement calling the proposed increase, “a tax grab, pure and simple.”

In the statement, OREA’s CEO-designate Tim Hudak, emphasized the impact on first-time homebuyers. “Toronto home buyers don’t need a tax hike – they already pay two land transfer taxes. City Council needs to make housing more affordable for young people, not less.”

This echoes an earlier statement issued by the Toronto Real Estate Board that said, “These proposed changes will increase costs for all Toronto home buyers, but impact first-time buyers the most.”

On the upside, the provincial government recently announced that first-time homebuyers will be able to claim a rebate of up to $4,000 on their provincial land-transfer tax (an increase from the previous $2,000 rebate) as of January 1, 2017.

So any potential first-time buyers out there might want to take December off to focus on the holidays, then close the deal in the new year.

Related Topics

Buying A Home / Economic News / Home Ownership / Lifestyle / Lifestyle News / Mortgages / RSM News / Selling Your Home / Taxes

2 thoughts on “Toronto Considering Raising Land Transfer Tax

  1. The current problem with the market that is pushing prices up is people can not afford to move and are staying put reducing the inventory of houses available. In the example above the tax along is more than $40,000.00. pushing the average cost for someone to trade up from an entirely level condo to a house at minimum $60,000.00. And that is assuming they haven’t got themselves trapped in a full interest payout mortgage or the TD or Scotia bank collateral charge mortgage just loaded with hidden cost.

  2. This is maddening, where the hell do all these politicians get the right to arbitrarily tax us over and over.I know Tory wants to build a legacy but that is not what taxpayers want. If you lost your job and your credit card is maxed the first thing you do is to look where can you cut and if you can’t you wait until you can in order to get your new car. Why is it different for these crooks! Recently we find out that public sector salaries are some 12% or more than private sector. It used to be the other way, and rightly so. Public workers have job security, far better benefits and lower work stress/pressure, bu they also have unions. I suggest that public workers salaries are frozen until they match private salaries and capped in the future to private increases. That must also apply to benefits including pensions. That is more than fair and it will balance out cost sharing. We should not be threatened by union strikes that create inequalities in our system! Furthermore,voters should be more careful with their voting habits, put their prejudices and brainwashing aside and vote for those who will look after the public’s welfare and not their staying power or looks! Let’s become more involved and demand more!

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