First-time home buyers to receive tax return in Ontario

First-timer home buyers in Ontario will be compensated in the form of tax refund of up to $4,000 from the land transfer tax as most first-time home buyers find it relatively difficult to buy a house in the province.

The refund which will take effect January 1^st 2017 is viewed by some as a means for younger people to favor the liberal governance while some see it an insignificant step which will make little difference to younger buyers’ buying ability.

But the Finance Minster explained to the legislature in Monday’s fall economic statement, that for most first time owners, realizing their dreams of owing their dream house is becoming a fading dream as home prices continue to increase.

This is why the $4,000 refund will erase the land-transfer tax from the first $368,000 for first time home buyers. It will also create a possibility for more first-time buyers to be able to afford a home. And presently first-time buyers can have up to $2,000 refund.

Looking at the home prices, in October, the standard price in Toronto was $762,975 with a range of prices of $429,407 for a condominium to over $1 million for a detach home.

Mr. Sousa had suggested a different solution than that of British Columbia which imposed a tax on foreign investors to cool down the housing prices in Vancouver. Ontario is however, going to limit the tax refund to only Canadian citizens and those who are permanently based in the country. Nonetheless, Sousa also suggested that he didn’t want to put more strain on foreign investors as it will cut down on international investment.

He went on to say that the main aim of the refund is to draw investors’ attention to Ontario.

Market expert however, do not appreciate the tax refund saying that its not an amount that could possibly influence the purchasing power of a buyer.

Benjamin Tal, deputy chief economist at CIBC World Markets, said in an interview that “it’s not a game changer, it’s just pocket money. It is not going to change the determining factor of whether to buy or not or what to buy.”

Benjamin Reitzes, senior economist at BMO Capital Markets, also commented that the tax refund does not solve the situation but rather adds more fuel to the existing problem.

For some, the tax refund is just a distraction from the main problem which is yet to be handled.