Provincial (Ontario) Land Transfer Tax Changes – 2017
2016 was a big year for changes in the Canadian Real Estate Market. On the heels of the announcement in October regarding changes in the mortgage underwriting rules for first time home buyers (ultimately reducing the buying power of first-time home buyers in Canada, read more here), the province announced changes to provincial land transfer tax which are aimed at helping increase affordability for first time home buyers, effective January 1, 2017.
Here are the changes:
- The government doubled the maximum rebate on the provincial tax that is offered to fist-time home buyers, meaning that first-time buyers won’t pay any land transfer tax on the first $368,000 of a purchase price
- These same buyers will become eligible for a rebate of up to $4,000 in provincial land transfer tax levied on the purchase of every house and condominium
- The provincial land transfer tax on properties over $2 Million rose from 2 per cent in 2016 to 2.5 per cent in 2017
Ultimately these changes are expected to have negative implications on transactions over $2 Million which, in the City of Toronto, represents a large part of the real estate market for centrally-located detached homes.
But Toronto is unique in that, unlike all other municipalities in Ontario, it has a municipal land transfer tax in addition to the provincial land transfer tax.
City of Toronto Municipal Land Transfer Tax – Proposed Changes
The City of Toronto is currently exploring raising the Municipal Land Transfer Tax in order to meet 2017 budget objectives. The effect would be an additional 0.5 per cent of tax on all buyers.
This could mean a seven per cent increase of $750 on top of the $11,000 for an average priced home purchased by a repeat buyer in Toronto.
Tim Hudak, CEO-designate of the Ontario Real Estate Association (OREA) said that if the city increases the municipal land transfer tax, it would effectively be “clawing back” the additional rebate offered by the province. Hudak says, “Unfortunately, Toronto is proposing to swipe up to 25 per cent of the provincial savings out of the pockets of young couples and put it into city coffers instead.”
Toronto Real Estate Board has launched a website to combat the City on the increase of land transfer tax.
Toronto City Council will finalize its budget in February 2017.
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