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Tag Archives: Toronto Real Estate

City of Toronto to Increase to Land Transfer Tax — Effective March 1, 2017

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

TREB Efforts Achieved Significant Concessions — First-Time Buyers Protected

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.

Toronto Land Transfer Tax — What’s New and What’s Coming?

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:

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.

Would you like to be kept informed on the latest in Toronto Real Estate? Contact a member of our team to be kept in the loop or sign up for our monthly real estate updates today.

2016 Change to Mortgage Qualifying Rules for First-Time Home Buyers — Explained

You might remember an uproar regarding real estate in October 2016, but what was that all about?

Without notice or preparation, the Canadian government announced on October 3rd, 2016 several major changes to mortgage rules aimed at curbing high demand in two of the country’s fastest growing markets — Toronto and Vancouver.

Bank of Canada implemented what they call a “stress test” for first-time buyers, forcing them to qualify for their mortgages at the Bank of Canada posted rate or 4.64% rather than the actual mortgage rates, reducing buying power for first-time home buyers across the board.

Why?

This was a very clear message from the Bank of Canada that interest rates would soon start rising, and true to form, they’ve already started. Since first-time home buyers often stretch their budgets and take on more than they can afford (and many lenders don’t prevent this from happening) this is the government’s way of protecting our housing market from a potential crash as a result of rising interest rates.

What’s the actual impact? (view the CBC article here)

Although this may temporarily slow the market in some areas, this move is expected to have positive ripple effects on the economy and is a much needed shifting of the winds for Canada.

In 2016, a mere 33 percent of individuals looking to purchase a home were first-time home buyers and in 2017, stats are showing over 50 percent of people with an eye for the home buying market will be first time purchasers. Even more astounding, over 60 percent of those buyers are under the age of 35. 2017 will most likely be the year that the Millennials begin their real estate takeover and the market will never be the same.

Looking for your first home or know someone who is? Contact a member of our team today to learn how we can help you with your real estate transaction and mortgage financing needs.

Changes to High-Ratio Mortgage Rates Announced — January 2017

As the Canadian housing market undergoes some significant changes with rising interest rates, changes to mortgage underwriting rules creating barriers to entry in the housing market and increases in property taxes across Ontario, it seems like everyone’s jumping on board to make owning a house more expensive. CHMC has now announced that it will be raising rates on high-ratio mortgages, followed by a matching announcement from private lender Genworth Financial a couple of days later.

What is a high-ratio mortgage?

Mortgages can be divided into two categories from a loan-to-value perspective: conventional and high-ratio. Conventional mortgages are when the borrower has a down-payment of more than 20% and a high-ratio mortgage is when the borrower has a down-payment of less than 20%. High-ratio mortgages are insured through either a private source (Genworth Financial Canada) or a government source (Canada Mortgage and Housing Corporation). To clarify, if your down-payment is less than 20%, you are required as a homeowner to purchase Mortgage Default Insurance that protects the lender in the case you default on your mortgage.

So what’s new?

The two main sources of Mortgage Default Insurance in Canada announced recently that they will be raising the rates on high-ratio mortgages in an effort to increase the cash they have on hand to hold against their mortgages (see chart for new rates).

First, CMHC announced their rate increases which were as follows:

  • According to CMHC, the changes will work out to an extra $5 a month, on average, per borrower.
  • Increased rates are in effect as of March 17, 2017.
  • This will not affect homeowners who have existing mortgages, only new applications received as of March 17.

Two days later, Genworth Financial announced they would be matching CHMC’s new rates as well as the date of implementation.

Do you have questions about real estate and mortgage financing? Contact a member of our team to find out more.

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