The Ontario government is proposing to raise the land transfer tax rebate available to eligible first-time home buyers to $4,000 starting in 2017. It’s a move that would double the amount of the current rebate and eliminate land transfer taxes on the first $368,000 paid for starter homes, which cost Ontarians an average of $375,000 in 2015. If the proposal succeeds, less than half of first-time home buyers would pay any land transfer taxes.
The province announced the proposal Monday in its 2016 Ontario Economic Outlook and Fiscal Review, acknowledging the challenges that first-time home buyers currently face in the housing market.
“We know that rising home values are a good thing for the provincial economy, but also a concern for a growing number of Ontarians,” said Minister of Finance Charles Sousa in a news release. “The government is committed to supporting an affordable and stable housing market while balancing the concerns of homeowners, first-time home buyers and renters.”
The province is also proposing to raise land transfer tax rates for the portion of purchase prices over $2 million for one or two single-family residences including condominiums, detached, semi-detached and town homes. The rate would rise to 2.5 per cent from the current rate of two per cent, which was last updated in 1989, and affect less than one per cent of home buyers.
It, along with an increase in the land transfer tax rate for the portion of purchase prices over $400,000 for other property types, including commercial, industrial and multi-residential, would fund the rise in the rebate for first-time home buyers.
The proposed rebate would only be available to Canadian citizens and permanent residents and first-time home buyers who obtain either status within 18 months of their purchase.
As the province leaves open the door to further measures aimed at making housing more affordable, it’s also seeking to gather more information to shape future policy. Such data could include the citizenship and residency status of buyers, property type and intended use, so the province plans to work with the Information and Privacy Commissioner of Ontario to ensure any personal details it collects are adequately protected.