Toronto Land Transfer Tax Approved

The Toronto City Council approved yesterday the much-debated Land Transfer Tax (LTT) in hopes of offsetting the city’s budget shortfall, sparking a scramble among buyers hoping to close their real estate deals before the end of the year.

The new tax will add up to 2% to the cost of both residential and commercial real estate transactions within the Greater Toronto Area, effective February 1st 2008.

The proposal met with controversy when it was put to the council earlier this year, with many business leaders fearing it would flatten a bull housing market in Toronto, and send buyers to the 905- outskirts.

In its approved form, buyers will be required to pay between 0.5 and 2% of the purchase price for residential or commercial properties, depending on the price. For example, the tax on a $400,000 home would come to $3725.

First-time home buyers will receive an exemption on the LTT for the first $400,000 of the purchase price, and any sales agreements signed by December 31st of this year will receive a full rebate on the tax.

The LTT is the first municipal property tax in Toronto’s history, and many of its opponents say it unfairly penalizes GTA residents, who must already pay a provincial land transfer tax.