By Dan Rankin
Buying a home in Ontario could become a few thousand dollars more expensive if the provincial government moves forward with a proposed change that would permit municipalities to charge a land transfer tax.
Sue Fowler, political action representative for the Huron Perth Association of Realtors, said the municipal land transfer tax (MLTT) would “essentially double the taxes that home buyers pay up front, on top of their deposit, down payment and closing costs.”
“It’s going to make purchasing a home quite difficult for a lot of people,” she said. “Particularly lower-to middle-income families, and maybe even retired folks that are wanting to sell their houses to downsize.”
Other issues Ontario realtors have raised about the proposed tax include that it would create a barrier that would delay or prevent many from becoming home owners, that it would cool the housing market, and that it would hurt the economy as less people are able to renovate and improve their homes.
The proposed municipal tax would be a graduated taxation system similar to the model used with the provinical tax, Fowler said.
“The first $100,000 is so much percent, and then up from there,” she said. “Obviously the higher the price of the house purchased, the higher the tax.”
According to Fowler and figures provided by the Huron Perth Association of Realtors, the median price for a detached residential property in St. Marys as of Oct. 31, 2015 is $256,000. The Provincial Land Transfer Tax calculated on a house at that price would be $2,315. A Municipal Land Transfer Tax comparable to Toronto’s would add an additional $2,285, for a total of $4,600 in taxes up front. For a semi-detached residential property in St. Marys, the median price as of Oct. 31 is $236,000. The PLTT on a property of that type would be $2,085. A MLTT like Toronto’s would add an additional $2,085, for a total of $4,170 in taxes up front.
There is a rebate at the provincial level that first-time homeowners can apply for, however it’s unclear if it will be available for the proposed municipal tax, Fowler said, adding that it “will be entirely up to the individual municipalities,” to implement.
“They may qualify for a rebate,” she said. “We’re always careful to say ‘may’ because it does depend on whether they’ve owned a home or not. If, for example, you have a couple getting together where one has owned a home in the past and the other hasn’t, they may not qualify.”
Like the rebate, it will also be up to the province’s municipalities to decide if they are interested in implementing the MLTT itself. St. Marys Town Councillor Don Van Galen said he thought it would be wise of the town to choose not implement such a tax, and that doing so could possibly give it a competitive advantage.
He said that, while the topic hasn’t come before Council, “Certainly to a lot of people who have come to St. Marys as a retirement option, the idea of a land transfer tax would just make that more expensive for them.”
“It would set us apart and make us a destination for people looking to move away from big tax cities like Toronto,” he said. “It’s really silly to be talking about that as if it’s new money. It’s the same tax payer paying it. It’s just a matter of keeping your operation within the tax base and using money wisely, rather than looking for new revenue opportunities.”
Since 2008, Toronto has been the only city in Ontario where home buyers must pay a municipal land transfer tax on top of the provincial tax which is already in place throughout the rest of the province. But the provincial government recently conducted a public consultation period, which closed on Oct. 31, on implementing the municipal tax in other communities, and – according to a press release from the Ontario Real Estate Association (OREA) – the Ministry of Municipal Affairs and Housing has indicated that they plan to move ahead with the plan.
Such a move would be in contradiction to a promise Ontario Liberals made to the OREA during the election in May 2014, the release claims. “On behalf of home buyers, we want them to remain good on this election promise and that means Ontarians need to send a strong message that the government must rethink its plan to double the land transfer tax burden on home buyers,” the release reads.
“It would be really good people were to write a letter or call their local MPPs to express their concern and, if they want, approach their municipal councillors to see if there are any talks going on within their own community,” Fowler said.
She encouraged anyone interested in staying informed on the issue or signing a petition against the new tax to visit DontTaxMyDream.ca.