The Toronto Real Estate Board (TREB) is raising concerns over proposed changes to Toronto’s Land Transfer Tax (LTT) that will increase costs for all home buyers in the city, but will impact first-time home buyers the most.
According to the TREB, the proposed LTT changes come at a time when many potential homebuyers are seriously concerned with housing affordability in Toronto, and contradicts recent provincial government changes to the Land Transfer Tax intending 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, TREB president, in a press release. “The proposed changes to the City of Toronto’s Land Transfer Tax are a cash grab, and would make all Toronto home buyers pay more Toronto Land Transfer Tax, which means that the City is proposing to make home ownership in Toronto even more expensive.”
This week, the City of Toronto’s Executive Committee will receive a report proposing that during the City’s upcoming 2017 Budget process, several changes be made to the way the Toronto Land Transfer Tax is implemented by harmonizing with the province’s higher Land Transfer Tax rates, including:
- Increasing LTT rates by adding an additional LTT rate on the portion of a property valued from $250,000 to $400,000.
- Harmonizing the LTT rebate for first-time home buyers with the Provincial LTT rebate threshold of $4,000, which would increase Toronto’s rebate for first-time home buyers from $3,725, but not represent a large enough increase to offset the increase those buyers would experience from the new additional LTT rate on the portion of a property valued from $250,000 to $400,000. This means that first-time buyers will 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 home. The city proposal also considers the possibility of increasing the rebate to $4,475 instead of $4,000, which would make first-time homebuyers eligible to receive a full refund if they purchase a property worth up to $400,000.
- Eliminating the first-time buyer rebate entirely for home buyers that have selected a home above a particular price that will be determined by City Council.
- Increasing the LTT rate on the value of a home over $2 million from two per cent to 2.5 per cent.
The buyer of an average-priced home already pays more than $11,000 in LTT to the City. The proposed changes, if applied, would mean the buyer of an average-priced home in Toronto would pay an extra seven per cent in LTT to City Hall, or $750. A first-time buyer of an average-priced Toronto home would pay an additional $475 to City Hall, representing a four per cent increase. This is in addition to the $75 LTT 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. 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,” added Von Palmer, chief communications and government affairs officer at TREB. “TREB will be participating in the City’s upcoming budget consultations and will be raising concerns with these proposals if they move forward.”