(Marketwired)—The Toronto Real Estate Board is raising concerns over the proposed Toronto Land Transfer Tax changes. These proposed changes will increase costs for all Toronto homebuyers, but impact first-time buyers the most.
The TLTT proposal comes at a time when housing affordability in Toronto is a serious concern for many, and contradicts recent provincial government Land Transfer Tax changes intended to help make housing more affordable.
“In recent months, housing affordability in Toronto has received significant attention not only from the city’s residents and businesses, but also from senior levels of government, which have been actively considering policy options in this regard,” said Larry Cerqua, president of the Toronto Real Estate Board (TREB).
“The proposed changes to the City of Toronto’s Land Transfer Tax are a cash grab, and would make all Toronto homebuyers pay more, which means that the city is proposing to make homeownership in Toronto even more expensive.”
A report that will be going to the City of Toronto’s Executive Committee next week is proposing that the city’s upcoming 2017 budget process consider numerous changes to the way the Toronto Land Transfer Tax is implemented by harmonizing it with the higher provincial Land Transfer Tax rates, including:
- Increasing the Land Transfer Tax rates by adding a new additional LTT rate on the portion of a property valued from $250,000 to $400,000.
- Harmonizing the Land Transfer Tax rebate for first-time homebuyers with the provincial Land Transfer Tax rebate threshold of $4,000, which would increase Toronto’s rebate for first-time buyers from $3,725, but not represent a big enough increase to offset the increase those buyers would experience from the new additional LTT rate on the portion of the property valued from $250,000 to $400,000. This means that first-time buyers would actually be losing ground because, with the new additional LTT rates, a $4,000 rebate equates to the LTT payable on a $368,000 home, whereas, currently without the additional LTT rates, the city’s maximum rebate of $3,725 equates to the LTT payable on a $400,000. The City proposal also considers the possibility of increasing the rebate to $4,475 instead of $4,000, which would represent the status quo for homebuyers (i.e. first-time homebuyers would be eligible for full refund if they purchase up to a $400,000 property).
- Eliminating the first-time buyer rebate entirely for homebuyers purchasing a home above a particular price to be determined by city council.
- Increasing the LTT rate on the value of a home over $2 million from 2 per cent to 2.5 per cent.
The purchaser of an average-priced home already pays over $11,000 in Land Transfer Tax to the city. The proposed changes, if implemented, would mean that a purchaser of an average-priced Toronto home, currently, would pay $750 more in Land Transfer Tax to Toronto, representing a 7 per cent increase. A first-time homebuyer of an average-priced Toronto home would pay an extra $475, representing a 4 per cent increase. This is in addition to the $75 Land Transfer Tax Administration Fee added through last year’s city budget process.
“These proposed changes would mean that the city’s budget relies even more heavily on a revenue source that has already been criticized by the city manager for being unpredictable and unreliable,” said Von Palmer, chief communications and government affairs officer at TREB. “City hall should be focused on making home ownership in this great city more affordable, not less, and should be relying less on this tax, not more.
“TREB will be participating in the city’s upcoming budget consultations and will be raising concerns with these proposals if they move forward.”