Home buyers beware.
You’re about to pay thousands of dollars more for that dream home.
The province is set to give all municipalities the right to double the amount of land transfer tax you’ll pay on your next real estate deal.
Industry insiders say they’ve been told the government will amend the Municipal Act to allow all municipalities to set their own municipal land transfer tax (MLTT).
Right now, only the City of Toronto is allowed to levy its own MLTT. It doubles the tax paid by buyers in all residential real estate deals.
“This is an unfair, unsustainable and unpredictable tax,” Patricia Verge, president of the Ontario Real Estate Association (OREA), told me Monday.
She said OREA is launching its own website — donttaxmydream.ca
— to help people fight the new tax and is urging potential home buyers to contact their local MPP to oppose a municipal land transfer tax in their community.
In Toronto, buyers pay about $10,000-$15,000 on an average home priced at about $450,000. Half of that goes to the province, the other half to the city.
An average of $300 million is raised annually in Toronto through the land transfer tax. The province gave the city the right to levy its own municipal land transfer tax when it made changes to the City of Toronto Act in 2006. The city introduced the controversial tax in February 2008.
Provincially, the land transfer tax is projected to raise $1.7 billion this year.
Verge said the business cost of the tax is $2.3 billion in lost economic activity and 15,000 jobs.
“The real estate transaction typically generates about $55,000 in offshoots,” she said. That includes costs of things like house painting, buying furniture, paying lawyers, and hiring building inspectors, she said.
She estimates the introduction of the MLTT has meant a reduction of 38,000 real estate transactions in Toronto.
“If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year,” she said. The land transfer tax is 2% of the purchase price across the province. In the City of Toronto, thanks to the MLTT, it’s double that — 4%.
This is a broken election promise by the provincial Liberals, Verge said.
The Liberals wrote to OREA during the election last year, saying they “had no plans” to extend these powers to municipalities.
“On behalf of home buyers, we want them to remain good on this election promise and that means Ontarians need to send a strong message that the government must rethink its plan to double the land transfer tax burden on home buyers,” she said.
“We were led to believe that they were not going to let the municipalities do this.
“We understand with revisions to the Municipal Act that now the government is giving municipalities the option to do this,”
Verge said. OREA made a presentation to a Queen’s Park committee looking into changes to the Municipal Act.
Toronto home buyers pay the highest land transfer taxes in North America.
“If this tax were to spread, Ontario would have the dubious distinction of being the most uncompetitive tax jurisdiction in North America when it comes to buying a home,” Verge said.
Owning a home is every family’s dream. There’s no feeling quite like walking into a house and knowing it’s yours.
Once upon a time, it was an attainable ambition for people of modest means. The government that pays lip service to supporting middle-class aspirations just wants to tax those hopes.
Land Transfer Tax
* 0.5% on property valued at up to and including $55,000.
* 1% above $55,000 up to and including $250,000.
* 1.5% above $250,000.
* 2% above $400,000 where the land contains one or two single family residences.
* The land transfer tax rate is the same for residents and non-residents of Canada.
* Those figures are doubled in Toronto.
* First-time home buyers are eligible for refunds.
Source: Christina Blizzard @ Toronto Sun