Toronto Land Transfer Tax Causes Uproar

The Toronto Star recently published a report on a new land transfer tax under consideration by the municipal council. The land tax would make Toronto homeowners the only Canadians to pay two, concurrent land transfer taxes, both provincial and municipal.

This has many groups up in arms, concerned about impacting a fragile housing market, concerned about the impact on condominium owners who haven’t yet taken possession of condos under construction, and concerned about encouraging development outside the GTA and the resulting urban sprawl.

The proposed tax, unanimously endorsed by the city’s executive committee last week, starts at 0.5%, jumping to 1.5% for homes of $250,000 or more, and 2% for homes $400,000 and up.

If approved by the municipal council next month, the tax would take effect in January 2008. For an estimated 25,000 condo and new home-buyers, this could come as a nasty surprise.

Detractors point out that additional thousands in tax will inevitably reduce buyers’ down payment, adding to the mortgage burden and accruing additional interest.

Others are worried that the Toronto home resale market, which hit a record of more than 11,000 sales last month, will cool if the new measure takes effect.

To calm fears of a general slow-down in development, and to avoid discouraging new homebuyers from entering the market, the city may implement a rebate of up to $2000, but only for first time buyers of new homes.

To read more on the proposed tax, and its potential ramifications, visit the Toronto Star at http://www.thestar.com/Business/article/231132.