Toronto which is the only city with a municipal land transfer fee is receiving warnings from realtors that the tax could backfire, and according to the Toronto Real Estate Board, first-time home might see an addition of $750 to the average home purchase.
Suggestions from the city manager’s report states that the municipal and provincial land transfer taxes can be synchronized but it will still increase on prices as the provincial tax is way higher.
Von Palmer, Toronto Real Estate Board’s chief communications and government affairs officer highlighted that the suggestion of synchronizing the taxes might seem like an equal judgment but it’s actually not as it implies as an additional $100 million will be placed for the city tax.
He went on to add that from its initiation, Toronto was making a $350 million on tax but this figure has increased to $500 million. With the average housing deal in the city of about $11,000 in municipal land transfer tax, it is a somewhat higher land transfer fees charged by the province.
With Ontario imposing a 1.5% on homes worth between $250,000 and $400,000, the city report proposes Toronto to increase its 1% tax to 1.5%.
Hence synchronizing the refunds for first-time buyers from the city’s $3,725 to the $4,000 charged by the province on first-time buyers will not be sufficient to balance the difference.
The adjustment that comes before Thursday’s city executive committee does not go along with the government’s aim to bring affordable housing to customer, but instead increases on the provincial land transfer tax refund for first-time home buyers.
The Toronto Real Estate Board will hold a meeting on Monday with Mayor John Tory’s staff.
The Mayor had no prior knowledge of the city’s report and on Monday he will reexamine the report as he is determined to making housing reasonable most especially for first time buyers.
And according to the Toronto Real Estate Board, first-time buyers are expected to pay an extra $475 to the city.
But according to Zoocasa CEO Lauren Haw, it’s not just to tax first-time buyers as the provisions to be made by the city is to be beneficial to all homeowners.
Perhaps the land transfer tax will not have much impact on buyers, but the new suggestions might probably lead some buyers to look for homes in other markets.
Furthermore the city manager’s report also warns that synchronizing the municipal and provincial taxes could lead to an extra increase on $77 million in 2017, and $85 million a year for Toronto.