poppajojo
Active Member
okay then, rbt was saying these taxes were proportional to the benefit of the real estate market, which is not true.
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okay then, rbt was saying these taxes were proportional to the benefit of the real estate market, which is not true.
RJR123
Active Member
Actually, I'm just about to close on my new condo (early August), so this subject is very topical. And I don't care if there is an extra 1% applied. I just chalk it up to life in the big city!
poppajojo
Active Member
Actually the new land transfer tax wouldn't be in effect till around next year.
RJR123
Active Member
I know, I just meant that even if it were going to be applied, it would not matter to me.
poppajojo
Active Member
rbt
Senior Member
Not entirely true. Most banks will be more than happy to tack it onto the mortgage provided the value of the property is still higher than the value of the mortgage.
There is standard process for tossing in an extra $10k to $20k to the mortgage for furniture, renovations, and other large "new home" expenses. Heck, some places like PC Financial even advertise "Cash Back" mortgages on their website where they give you a large chunk of cash and pump the interest rate up a touch.
H
Hydrogen
Guest
Actually, the hike in taxes in that city did drive many businesses to the suburbs and slowed urban development, as well. The mix of politics and excessive taxation hit Montreal very hard.
yyzer
Senior Member
not in my experience....yes, you can get 'home improvement' mortgages, but you must submit written estimates for the work to be done, in order to qualify, and the work must be specifically for home improvements...
'Cash back' mortgages, do exist, but you will need to have absolutely perfect credit to get, and you will pay an interest rate premium (ie you won't get the preferred rate, you will pay the regular advertised rate). This can end up costing thousands more in interest over a five year term. The banks want you to have at least 5% down, to get the best rates, and they want you to have closing costs available. Some lawyers will defer their fee, but the current land transfer tax (provincial) must be paid on the closing date.
rbt
Senior Member
I've never tried to find funds that way. Just know they are offered.
Mike in TO
Senior Member
Two articles from the Globe Today:
Councillors split over looming tax vote
JENNIFER LEWINGTON
CITY HALL BUREAU CHIEF
July 10, 2007
Undecided Toronto councillors find themselves in the political cross-hairs in the run-up to what's expected to be a close vote next Monday on Mayor David Miller's pitch for two new taxes.
The mayor's stalwarts think they have the votes to support the taxes - a levy of up to 2 per cent on property purchases and a $60 charge on motor vehicle ownership, which could raise $356-million a year for the cash-strapped city.
The right-leaning minority on council and interest groups opposed to the new taxes still think they have a shot - a long shot - at defeating the plan.
But both sides agree they need the swing voters - a group of up to 10 councillors - to win.
Councillor Bill Saundercook (Parkdale-High Park), among the undecided, says the arm-twisting from both sides has started.
Councillor Mark Grimes (Etobicoke-Lakeshore), who often sides with Mr. Miller, says he is leaning toward a no vote. "I am going to be very hard pressed to be supporting it," he said. "I don't think the stomach is out there [among the public for new taxes]."
Councillor Suzan Hall (Etobicoke North), another member of council's political middle, said "I am leaning to supporting it but have not made up my mind."
She supports the city's case for new revenues, but says her constituents are unhappy about new taxes. "I am caught between a rock and a hard place," she said.
Of the two proposed taxes, the land transfer levy is proving a harder sell than the proposed charge on motor vehicle registrations. Ms. Hall, among several undecided councillors, wants relief from the land transfer tax for first-time home buyers. (At present, only first-time buyers of newly built homes escape the tax.)
Councillor Doug Holyday (Etobicoke Centre), who wants the mayor to put off the tax measures until the fall at least, said the swing voters will be under pressure from angry constituents.
But even those who often vote against the mayor are split on his tax measures.
Councillor Karen Stintz (Eglinton-Lawrence) is firmly opposed to the land transfer tax but said she might support the motor-vehicle levy if the $56-million in forecast revenues go to the $300-million backlog on road repairs.
Home tax called 'a recipe for a slowing economy'
HEATHER SCOFFIELD
From Tuesday's Globe and Mail
July 10, 2007 at 4:34 AM EDT
There's no doubt Toronto Mayor David Miller had to do something major to avoid a fiscal disaster. Canada's largest city was heading toward bankruptcy without a new way to fund its expenses.
But the timing and the target of his proposal to slap a 2 per cent tax on home purchases are questionable.
The hefty tax increase comes at a time when real estate is driving consumption across the country, especially in Toronto. And it comes when the city's economy is precarious at best - as wages decline, wealth moves to the suburbs, and job quality is eroding.
"If [city] council was really concerned about making the city a great place to live, work and invest, it would not propose a significant increase in the cost of transacting in property," said Finn Poschmann, director of research at the C.D. Howe Institute. "The tax is utterly unconnected to the value of services the city provides, and in that sense is an all-but-impossible-to-defend lunge for money."
On the surface, Toronto's economy looks fairly strong. The Conference Board of Canada projects that the economy of the Toronto area will grow by a mediocre 2.5 per cent this year, but will soar over the next five years, becoming the top-growing metropolitan area in the country.
But the Conference Board, like most analyses, treats Toronto and its suburbs as one economic entity. The dynamics of the city and suburbs are quite different. In the suburbs, population is growing quickly, wages and salaries are surging and job growth is strong. The opposite is true of the city.
While up-to-date economic figures specific to the city of Toronto are hard to come by, research done by CIBC World Markets suggests that Torontonians are more inclined than most of the rest of the country to use their homes as automated banking machines, or ABMs, from which they can draw cash. Household debt ratios, which show the amount of debts compared to assets, are higher in Toronto than in any other city except Montreal, economist Benjamin Tal said.
And the borrowing activity has fuelled much of Toronto's consumer strength, he added.
"We estimate that at least one-third of this money goes toward spending. Clearly, credit has been important in supporting spending, no question about it."
In other words, Torontonians have seen the value of their homes rise steadily for the past few years, and used the rising value to borrow against their homes or take out lines of credit. They then went out and spent the money, driving the Toronto economy along even as manufacturing and export activity struggles.
Toronto is already dealing with high energy prices and rising interest rates, he said. Also, property taxes and user fees have already risen substantially, straining taxpayers. The gap between rich and poor is widening in the city, and it's bigger than most other cities, Mr. Tal added. Those forces, accompanied by a tax targeted at home sales "is a recipe for a slowing economy."
Despite the dangers, many analysts believe Toronto doesn't have much of a choice, and applaud Mr. Miller's decision to raise city revenues in an area where he has control, rather than rely on subsidies and transfers from other governments.
"There is a fundamental structural issue in city finances," Anne Golden, president of the Conference Board, argued. Toronto alone faces a $1.1-billion shortfall every year, the board's research shows, and it is constantly having to stitch together contingency plans to make ends meet. The home-purchases tax may stifle consumer spending marginally, Ms. Golden said, but at least it's a sustainable revenue stream for a city badly in need of funding.
"I believe that the biggest threat to the city of Toronto is the deterioration of services."
*****
Suburban magnet?
The proposed tax on property sales comes as the city's economy shows signs of declining employment and job quality compared to outlying municipalities.
EMPLOYMENT
Employment growth Unemployment rate
City of Toronto -0.1 7.25
Toronto CMA* 2 6.4%
WAGES
Median hourly wage; percentage change year-to-year, May, 2006 to May, 2007 (unadjusted)
City of Toronto -0.7%
Toronto CMA* 1.7%
NEW HOME CONSTRUCTION
Housing starts; percentage change year-to-year, May, 2006 to May, 2007
City of Toronto -87.4%
Toronto CMA* -38.4%
*The "Census Metropolitan Area "includes the City of Toronto plus the GTA, Bradford, Gwillimbury, New Tecumseth and Georgina.
SOURCES: CITY OF TORONTO ECONOMIC DEVELOPMENT DIVISION, STATISTICS CANADA
Councillors split over looming tax vote
JENNIFER LEWINGTON
CITY HALL BUREAU CHIEF
July 10, 2007
Undecided Toronto councillors find themselves in the political cross-hairs in the run-up to what's expected to be a close vote next Monday on Mayor David Miller's pitch for two new taxes.
The mayor's stalwarts think they have the votes to support the taxes - a levy of up to 2 per cent on property purchases and a $60 charge on motor vehicle ownership, which could raise $356-million a year for the cash-strapped city.
The right-leaning minority on council and interest groups opposed to the new taxes still think they have a shot - a long shot - at defeating the plan.
But both sides agree they need the swing voters - a group of up to 10 councillors - to win.
Councillor Bill Saundercook (Parkdale-High Park), among the undecided, says the arm-twisting from both sides has started.
Councillor Mark Grimes (Etobicoke-Lakeshore), who often sides with Mr. Miller, says he is leaning toward a no vote. "I am going to be very hard pressed to be supporting it," he said. "I don't think the stomach is out there [among the public for new taxes]."
Councillor Suzan Hall (Etobicoke North), another member of council's political middle, said "I am leaning to supporting it but have not made up my mind."
She supports the city's case for new revenues, but says her constituents are unhappy about new taxes. "I am caught between a rock and a hard place," she said.
Of the two proposed taxes, the land transfer levy is proving a harder sell than the proposed charge on motor vehicle registrations. Ms. Hall, among several undecided councillors, wants relief from the land transfer tax for first-time home buyers. (At present, only first-time buyers of newly built homes escape the tax.)
Councillor Doug Holyday (Etobicoke Centre), who wants the mayor to put off the tax measures until the fall at least, said the swing voters will be under pressure from angry constituents.
But even those who often vote against the mayor are split on his tax measures.
Councillor Karen Stintz (Eglinton-Lawrence) is firmly opposed to the land transfer tax but said she might support the motor-vehicle levy if the $56-million in forecast revenues go to the $300-million backlog on road repairs.
Home tax called 'a recipe for a slowing economy'
HEATHER SCOFFIELD
From Tuesday's Globe and Mail
July 10, 2007 at 4:34 AM EDT
There's no doubt Toronto Mayor David Miller had to do something major to avoid a fiscal disaster. Canada's largest city was heading toward bankruptcy without a new way to fund its expenses.
But the timing and the target of his proposal to slap a 2 per cent tax on home purchases are questionable.
The hefty tax increase comes at a time when real estate is driving consumption across the country, especially in Toronto. And it comes when the city's economy is precarious at best - as wages decline, wealth moves to the suburbs, and job quality is eroding.
"If [city] council was really concerned about making the city a great place to live, work and invest, it would not propose a significant increase in the cost of transacting in property," said Finn Poschmann, director of research at the C.D. Howe Institute. "The tax is utterly unconnected to the value of services the city provides, and in that sense is an all-but-impossible-to-defend lunge for money."
On the surface, Toronto's economy looks fairly strong. The Conference Board of Canada projects that the economy of the Toronto area will grow by a mediocre 2.5 per cent this year, but will soar over the next five years, becoming the top-growing metropolitan area in the country.
But the Conference Board, like most analyses, treats Toronto and its suburbs as one economic entity. The dynamics of the city and suburbs are quite different. In the suburbs, population is growing quickly, wages and salaries are surging and job growth is strong. The opposite is true of the city.
While up-to-date economic figures specific to the city of Toronto are hard to come by, research done by CIBC World Markets suggests that Torontonians are more inclined than most of the rest of the country to use their homes as automated banking machines, or ABMs, from which they can draw cash. Household debt ratios, which show the amount of debts compared to assets, are higher in Toronto than in any other city except Montreal, economist Benjamin Tal said.
And the borrowing activity has fuelled much of Toronto's consumer strength, he added.
"We estimate that at least one-third of this money goes toward spending. Clearly, credit has been important in supporting spending, no question about it."
In other words, Torontonians have seen the value of their homes rise steadily for the past few years, and used the rising value to borrow against their homes or take out lines of credit. They then went out and spent the money, driving the Toronto economy along even as manufacturing and export activity struggles.
Toronto is already dealing with high energy prices and rising interest rates, he said. Also, property taxes and user fees have already risen substantially, straining taxpayers. The gap between rich and poor is widening in the city, and it's bigger than most other cities, Mr. Tal added. Those forces, accompanied by a tax targeted at home sales "is a recipe for a slowing economy."
Despite the dangers, many analysts believe Toronto doesn't have much of a choice, and applaud Mr. Miller's decision to raise city revenues in an area where he has control, rather than rely on subsidies and transfers from other governments.
"There is a fundamental structural issue in city finances," Anne Golden, president of the Conference Board, argued. Toronto alone faces a $1.1-billion shortfall every year, the board's research shows, and it is constantly having to stitch together contingency plans to make ends meet. The home-purchases tax may stifle consumer spending marginally, Ms. Golden said, but at least it's a sustainable revenue stream for a city badly in need of funding.
"I believe that the biggest threat to the city of Toronto is the deterioration of services."
*****
Suburban magnet?
The proposed tax on property sales comes as the city's economy shows signs of declining employment and job quality compared to outlying municipalities.
EMPLOYMENT
Employment growth Unemployment rate
City of Toronto -0.1 7.25
Toronto CMA* 2 6.4%
WAGES
Median hourly wage; percentage change year-to-year, May, 2006 to May, 2007 (unadjusted)
City of Toronto -0.7%
Toronto CMA* 1.7%
NEW HOME CONSTRUCTION
Housing starts; percentage change year-to-year, May, 2006 to May, 2007
City of Toronto -87.4%
Toronto CMA* -38.4%
*The "Census Metropolitan Area "includes the City of Toronto plus the GTA, Bradford, Gwillimbury, New Tecumseth and Georgina.
SOURCES: CITY OF TORONTO ECONOMIC DEVELOPMENT DIVISION, STATISTICS CANADA
Junglab
New Member
Toronto has had one of the lowest rates of increase in the nominal tax rate on residential property amongst GTA municipalities - it has been close to 0% for much of the past 10 years.
Of course, during this time, individual property tax payments have fluctuated to varying degrees, with some suburban properties registering decreased payments, and some downtown properties registering increased payments, according to changing land value as assessed by Current Value Assessment protocols. However, one of the main problems with this system is that assessment is based on virtual home values - i.e. the value of a house were it to sell at the present day, as gleamed (imperfectly) from sales of putatively similar properties in the area - rather than actual home sales.
A 1-2% tax applied to actual home sales obviates this problem, by applying property taxes to the actual (vs. theoretical) value of a property. As such, it is a fairer assessment of the value of a given property and, being a one-time payment (per owner per property), does not contribute to general costs-of-living, as would be the case with a substantial increase in general property tax rates. Consider which you would prefer - a one-time payment on the actual value of your property, or a recurring tax on its potential value? Here, I should add that much has been made of the problem CVA poses for owners of downtown properties - increasing property tax rates by a sufficient margin to net $300 million would vastly inflate the taxes paid on Urban Shocker's modest home over the long term, and likely, dissaude potential buyers of downtown properties FAR more relative to the proposed residential tax.
Of course, during this time, individual property tax payments have fluctuated to varying degrees, with some suburban properties registering decreased payments, and some downtown properties registering increased payments, according to changing land value as assessed by Current Value Assessment protocols. However, one of the main problems with this system is that assessment is based on virtual home values - i.e. the value of a house were it to sell at the present day, as gleamed (imperfectly) from sales of putatively similar properties in the area - rather than actual home sales.
A 1-2% tax applied to actual home sales obviates this problem, by applying property taxes to the actual (vs. theoretical) value of a property. As such, it is a fairer assessment of the value of a given property and, being a one-time payment (per owner per property), does not contribute to general costs-of-living, as would be the case with a substantial increase in general property tax rates. Consider which you would prefer - a one-time payment on the actual value of your property, or a recurring tax on its potential value? Here, I should add that much has been made of the problem CVA poses for owners of downtown properties - increasing property tax rates by a sufficient margin to net $300 million would vastly inflate the taxes paid on Urban Shocker's modest home over the long term, and likely, dissaude potential buyers of downtown properties FAR more relative to the proposed residential tax.
Urban Shocker
Doyenne
Nice idea, but this either/or scenario is unlikely to happen since revenue for the City would plunge - unless everyone sold their house every year!
CVA's a bitch. A fancily-reno'd semi a few doors away sold for $829 K a couple of months ago, and the less posh one next door to it was immediately sold for over 600K. If I ever moved from Riverdale I'd never be able to afford to move back, so I'm staying put and renovating the Summer Palace year-by-year, wing-by-wing.
CVA's a bitch. A fancily-reno'd semi a few doors away sold for $829 K a couple of months ago, and the less posh one next door to it was immediately sold for over 600K. If I ever moved from Riverdale I'd never be able to afford to move back, so I'm staying put and renovating the Summer Palace year-by-year, wing-by-wing.
Junglab
New Member
Well... the city and its various departments seem convinced that it WILL net them some $300 million a year. I myslef haven't confirmed these numbers, but it would be very bizarre if they were an order of magnitude or so off.
And, if indeed they ARE more or less correct, as a downtown resident, I am FAR happier to pay a single fee on selling my home than significantly greater property tax rates on an already skyrocketting CVA.
By the way, if you ever DID move from Riverdale, you would reap the rewards of increased property tax value... so all is not totally lost.
And, if indeed they ARE more or less correct, as a downtown resident, I am FAR happier to pay a single fee on selling my home than significantly greater property tax rates on an already skyrocketting CVA.
By the way, if you ever DID move from Riverdale, you would reap the rewards of increased property tax value... so all is not totally lost.
EnviroTO
Senior Member
This whole land transfer tax is basically city council being too chicken to increase property tax an equivalent amount. Future residents end up subsidizing old ones so that city council doesn't need to take political heat now. However this goes against city councils agenda on creating affordable housing. First time home buyers are the ones least able to be able to pay a big upfront charge and they are the ones that get hit. Not that I don't have any sympathy for property rich but money poor homeowners but on the other side of the fence are people with no property and who will have to shell out a fortune when you sell them your house. The RSP first home buyers plan becomes more and more useless as now some 25% of someones savings taken out under the plan goes directly to the province and city rather than increasing the person's ability to buy a first home. All that is being done here is downloading the tax burden on to home buyers... eventually as current home buyers die off or move out these new home buyers become the same tax payers which would have paid an increased property tax rate collecting the same revenues for the city. The city might as well simply say that all tax payers who buy property after a certain date have a higher property tax rate... but wait... people would see through that easily.
rbt
Senior Member
As far as I know first time home buyers won't pay a single penny more as the city intends to honour the same rebate process as the province uses for land transfer taxes.