On February 15, 2017 the City of Toronto Council approved changes to the Toronto Land Transfer Tax that mean additional Land Transfer Tax (LTT) costs for some home buyers with a closing date on or after March 1, 2017.
The changes are:
Added an additional LTT of 0.5% of the value of a residential or non-residential property from $250,000 to $400,000 (an additional $750)
Added an additional LTT of 0.5% of the value of a residential property above $2 million
Added an additional LTT of 0.5% of the value above $400,000 of a non-residential property
Increasing the maximum allowed First-Time Home Buyer Rebate to $4,475, up from $3,725
Amended the first-time home buyer rebate program eligibility rules to restrict rebate eligibility to Canadian citizens or permanent residents of Canada
Toronto Real Estate Board (TREB) undertook a comprehensive campaign to oppose the proposed changes. As a result of these efforts, significant concessions were made to the proposals that went forward for City Council’s consideration as follows:
Under the original proposal, first-time buyers would have been forced to pay an additional $475 in Toronto LTT. However, TREB pushed for an increase in the rebate from $3,725 to $4,475, meaning first-time buyers will not face an increase.
Many first-time buyers would have lost eligibility for the first-time buyer rebate entirely, meaning a total LTT increase of $4,475. TREB pushed back and all first-time buyers will be eligible for a rebate.
As a result of TREB’s efforts, first-time home buyers will NOT see any change.
Do you have the full picture of how municipal and provincial land transfer tax impacts Toronto real estate? Click here to view the breakdown of land transfer tax for Toronto homeowners.
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.
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.