President's Toronto SUN Column
TREB President's Column as it appears every Friday in the Toronto Sun's Resale Homes and Condos section.
Land Transfer Taxes Unfair to Home Buyers
September 30, 2011 -- If you are a regular reader of this column, you will know that REALTORS® are no fans of land transfer taxes, which are paid by home buyers when they purchase a home. We strongly believe that home ownership is something that all levels of government should be encouraging, not discouraging with punitive taxes directly targeted at home buying. That's why we are calling for governments to re-think where they stand on these taxes.
Land Transfer Taxes are substantial. In Toronto, the average home buyer pays close to $12,000 in land transfer taxes, about half to the provincial government and about half to the City of Toronto, each of whom have their own land transfer tax. Home buyers in the rest of the province only pay the provincial land transfer tax.
As mentioned, REALTORS® oppose these taxes. For years, we have been fighting to prevent them, eliminate them and reduce their burden on home buyers. We have led the charge against the City of Toronto Land Transfer Tax, and we are proud to say that we are working closely with Mayor Rob Ford towards the fulfillment of his commitment to repeal this tax.
I don't have anything good to say about the City of Toronto Land Transfer Tax, but I will say this: the City's Land Transfer Tax rebate for first-time buyers is better than the provincial government's. First-time buyers in the City of Toronto are eligible for a rebate of the City's land transfer tax to a maximum of $3,725, the land transfer tax on a $400,000 home; whereas the maximum for a provincial land transfer tax rebate is only $2,000, the equivalent of the land transfer tax on a $227,500 home.
Unfortunately, with an average home in the City of Toronto currently costing home buyers about $12,000 in land transfer taxes, that means first-time homebuyers still pay a balance of over $6,000.
Land transfer taxes are charged based on the price of a home; the higher the price, the higher the tax. In the past, when home prices were lower, the provincial land transfer tax rebate essentially provided for a complete exemption for first-time buyers. However, from 1996 to 2010, the average price of a resale home in Ontario went up 120 per cent from $155,725 to $342,245. Specifically in the GTA, where average prices went from $198,150 to $431,463 over the same time period, homebuyers are at an even bigger tax disadvantage due to higher prices compared to the rest of the province. During the same period, the provincial government increased their Land Transfer Tax rebate by only $275 or 16 per cent. As a result, a first time home buyer today in Ontario pays $1,500 in LTT more than the previous generation on an average priced home after receiving the rebate; in the GTA, they pay $3,100 more in LTT.
REALTORS® are therefore urging all candidates running in the 2011 Ontario Election to support increasing the LTT rebate for first time home buyers from $2,000 to $3,500. This would return fairness to the LTT rebate program and allow present day first time home buyers to enjoy the same tax savings as buyers in previous years.
REALTORS® will continue to oppose land transfer taxes. We believe that no home buyer should have to pay these punitive taxes and will continue to work towards that objective.
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