News   Mar 18, 2024
 810     0 
News   Mar 18, 2024
 2.7K     4 
News   Mar 18, 2024
 785     0 

New Land Transfer Tax

L

luvbrka

Guest
As most of you will have heard, the City of Toronto is proposing adding a 1.5% land transfer tax which would be in addition to the current Ontario land transfer tax which is 2% on amounts above $400,000.

If we assume that the City of Toronto land transfer tax will be 3/4 of the current Ontario Land Transfer tax, then based on the current Ontario Land Transfer Tax formula, the purchaser of the following homes would pay land transfer tax as follows:

home cost Old tax New tax
$350,000 $3,725 $6,518
$1,000,000 $16,475 $28,831

The land transfer tax will also apply to commercial real estate.

Can you imagine someone paying almost $30,000 in land transfer taxes on a million dollar home? If you add property tax to that, then total tax paid could approach $40,000 in the first year of ownership.

An investor in a condo will lose almost all of his income return on a condo in the first year because of land transfer tax. Might this new tax be onerous enough to significantly discourage investor interest in condos?

Will this new tax spur housing development in 905? If so, wouldn't this be contrary to Toronto's desire for 416 intensification? Transportation infrastructure costs would rise as well as pollution if this spurred increased 905 growth.

Any comments?
 
As I have said in the past, I think that all of these new City of Toronto initiated taxes are wrong and unjustified. Generally speaking, Toronto taxpayers pay no more or no less taxes than the average Canadian. The problem is that upper levels of government take all of our money and spend it elsewhere.

What the City of Toronto should be doing is getting more aggressive with their campaign to get our tax dollars back. Instead it's saying hey, let's charge additional taxes over and above what the rest of the country pays to leave Torontonians with even less money to take home. Sadly, the city's secret weapon appears to be nothing more than a picture of an oversized penny placed throughout the transit system.
 
I completely agree Chuck! The city has essentially checked out from demanding a piece of the provincial funding brought on by past provincial mismanagement and is now looking to drain city residents at an ever greater rate. The land transfer tax is particularly nasty as it takes clear advantage of the increasing real estate values to be found in the city. Why buy in Toronto when you can skip the higher prices - and this new tax - by purchasing just outside of the city?

What's with Miller? Once a dipper always a dipper?
 
It is a mistake that the city of Toronto complains so little about downloaded social costs compared to the 905, because it would affect Toronto the most by far if there was no pooling.
 
Well, aside from demanding money back from the other governments (done time and time again... no real success).... what is better? Raise $20 - $30 million per year on taxing entertainment tickets, thereby driving tourism as a whole down (causing several effects ie job loss, disinvestment in the city etc), or raising $300 million per year in land transfer? Even if this causes people to look into the 905 for home purchases, I dont think it is going to cause a mass exodus of people from Toronto. It may slow down our boom, but I doubt by very much. People who want to live downtown, will still love downtown. It will likely effect those in the fringe areas of Toronto, but those condos/homes dont typically sell for $1 million +, so wont have a huge $30,000 land transfer tax.
I think that this taxation tool is the best of the options. Road tolls, parking lot taxes, entertainment taxes, alcohol and cigarette taxes are all small penny compared to land tax, and will actually have a much worse effect on the city economically than land transfer..... Toronto is still going to be cheap for home buying compared to most big international cities.
 
You can pay mine, then.

You're awfully whiny. You can pay your own. A good conservative is putting down at least 25% (plus an additional 5% overhead for legal, etc.), so that extra 1.5% rounds out.

Most people who have difficulties coming up with the additional $2000 (on a $250000 purchase) will do the same as they do with other closing fees, add it straight onto the mortgage.

Worst case scenario is that this new tax will cause a 1.5% price drop for Toronto homes. That is, they'll only inflate in price by 5.5% this year instead of 7%.


Keep in mind a similar increase was applied to new development last year. We've seen record sales of new construction since. The tax increase had absolutely no impact on sales despite causing a noticeable bump in prices.
 
What exactly is the reasoning behind the land transfer tax? What service does the municipal government provide during property sales that requires this fee?
 
You sort of answered your own question there. If it were a user fee, it would be levied in exchange for a service that the city provides. This is a tax, designed to raise revenues for the assortment of public services that the city offers.
 
Chuck;98750 What the City of Toronto should be doing is getting more aggressive with their campaign to get our tax dollars back. Instead it's saying hey said:
additional[/I] taxes over and above what the rest of the country pays to leave Torontonians with even less money to take home. Sadly, the city's secret weapon appears to be nothing more than a picture of an oversized penny placed throughout the transit system.

Unfortunately, neither the provincial nor the federal governments seem inclined to share any of the taxes they receive with our municipal government. There is just no political incentive to do so because legislative seats are always skewed towards rural and small town/city ridings. It's unfortunate because the future lies in our big cities where most immigrants go and most creative and economic activity happens. Big cities need a renewed infrastructure and if the only way to raise funds to pay for that infrastructure and run what we already has is through this type of tax, then it has to be done. Hopefully people will start screaming in the direction they should be which is towards upper level governments which have more money than they have the good sense to know what to do with.
 
You're awfully whiny. You can pay your own.

Get this: I pay taxes. I pay plenty of taxes. So do many other people. That tax money is often poorly used by the various levels of government. The result is this: more taxes.

I have an issue with poor management of public funds. I have a right to have an issue with this problem, as a member of the public and all. Too bad if you don't like the attitude.
 
Get this: I pay taxes. I pay plenty of taxes.

I have an issue with poor management of public funds.

I don't doubt that you pay taxes. There are probably more than a few members of this board who pay an order of magnitude more in taxes than yourself.

If you know of anything significantly wrong at City Hall, then take it to the authorities. I somehow doubt they're misspending $500M per year simply based on the fact that Toronto has been raising taxes the slowest over the last 5 years (most Ontario municipalities have been bumping rates far faster than Toronto), spending really hasn't increased since the Harris/Lastman term (you know, fiscal conservative types), and most of the spending increases are in provincially mandated programs.


Anyone I know who flips real-estate regularly is very happy about this new tax provided the services it maintains keep real-estate values in place. I'll gladly pay 1.5% on a flip rather than lose 10% of the property value because of crumbling services.


For flippers, this is well under a 10% increase in the cost of the transaction for something that should hold or add 10% to the value of the properties you are flipping, particularly for very high value properties. Million dollar units don't stay that way without solid municipal services backing them.

real estate brokerage commission
mortgage brokerage commission (banks keep it if you go direct to them)
legal fees
provincial fees
GST for new developments
Development charges (hidden in purchase price)
Tarion fees
Various hookup fees (water, hydro, etc).


Just add the new charge to your spreadsheet and continue on with life OR do something about it. Complaining on an anonymous forum certainly isn't going to change anything.

Actually, getting your real-estate sales person license and mortgage agent license can give you a significant savings on your own purchases and sales.
 
Anyone I know who flips real-estate regularly is very happy about this new tax provided the services it maintains keep real-estate values in place. I'll gladly pay 1.5% on a flip rather than lose 10% of the property value because of crumbling services.

For flippers, this is well under a 10% increase in the cost of the transaction for something that should hold or add 10% to the value of the properties you are flipping, particularly for very high value properties. Million dollar units don't stay that way without solid municipal services backing them.

What? This would hurt real-estate flippers the most of all people. They want a hot market. They would be the opposite of very happy about this new tax. The negatives of this tax to them would far outweigh any hypothetical benefits they recieve from improved municipal services.
 

Back
Top