You may have already heard that Toronto's Land Transfer Tax (LTT) has been subject of considerable controversy. For those of you who aren't sure what it is or what impact it plays on their real estate purchase, here's a little background.
Roughly translated, LTT is a tax imposed by the government and paid by the purchaser of a property. Of course, we have tax breaks for many first time buyers but it is important to remember that the tax is calculated based on the purchase price of the property. This minor detail makes a large difference to a family who has sold their condo for $400,000 and purchased a $900,000 house. They will owe LTT on the $900,000 house, and in Toronto, they essentially have to pay twice.
How much is it? This is a question I am asked frequently by clients. It's actually not a mystery, as many people think although seeking legal advice is always best since there are exceptions. The tax rates are shown below:
Provincial LTT
Amounts up to and including $55,000 -0.5 %
Amounts exceeding $55,000 up to and including $250,000 - 1.0 %
Amounts exceeding $250,000 and up to and including $400,000 - 1.5 %
Amounts exceeding $400,000 where the land contains one or two single family residences - 2.0 %
Municipal LTT
Single Family Residences containing one or two units:
Amounts up to and including $55,000 - 0.5 %
Amounts exceeding $55,000 up to and including $400,000 - 1.0 %
Amounts exceeding $400,000 where the land contains one or two single family residences - 2.0 %
All other Toronto Property:
Amounts up to and including $55,000 - 0.5 %
Amounts exceeding $55,000 up to and including $400,000 - 1.0 %
Amounts exceeding $400,000 up to and including $40,000,000 - 1.5 %
Amounts exceeding $40,000,000 - 1.0 %
In case you missed it, this means that when we buy property in Toronto, we essentially double our LTT. This means that if you purchase a $500,000 home in Toronto, you can expect to spend about $12,200 on tax and if you purchase a $1,000,000 home, you can expect to spend about $32,200! We are the only city in Ontario subjected to this excessive taxation and it is simply unfair.
The Toronto Real Estate Board has initiated a Let's Get This Right, Toronto campaign to repeal this unjust tax. Their two step approach suggests removal of the tax and better budget planning for the government. Please visit their website to learn more and find out how you can help the cause with a simple email or letter or even just by sharing the site on social media.
I have had clients who have said that the LTT played into their decision to guide our search to the suburbs but remember, this is not just a Toronto problem. While city dwellers are paying the tax, long term consequences such as fewer people moving to the city (a lack of demand) could impact neighbouring housing markets as well.
We're called "Toronto The Good" and we are generally fair. We say "please" and "thank you," we give up our seats on the subway if we see a pregnant woman, we don't want a casino in our backyard. We're practically a few steps away from prohibition... Okay, maybe not quite. Still, we expect our taxes to be based on some level of fairness and we don't appreciate being treated like fools. We're polite, not docile! Let's do our part to keep Toronto affordable!
