Toronto, October 30 (CINEWS): Critics of the Municipal Land Transfer Tax insist it would make Ontario the most uncompetitive tax jurisdiction in North America when it comes to buying a home.
Toronto City Council became the first municipality in Ontario to approve Municipal Land Transfer Tax which took effect in February 1, 2008 . This tax added thousands of dollars to a home in Toronto.
This means that a Toronto home buyer paying $450,000 for his home pays a total of $10,200 in land transfer tax — $5,475 to the province and $4,725 to city. And with most detached homes in the GTA costing $600,000 to one million dollars on average, the Municipal Land Transfer Tax could really pinch home buyers and have a dampening effect on the market.
Liberal government is not ruling out giving all Ontario municipalities the option to impose a local land transfer tax.
That municipal tax would be over and above the provincial land transfer tax.
The problem is cash-starved municipalities have been desperately seeking ways to fill their coffers and have been seeking this fantastic revenue generating tool for a long time. Now this seems to be on the horizon as consultations are being held regarding the changes to the Ontario Municipal Act.
Meanwhile The Ontario Real Estate Association (OREA) is strongly urging the government to think about the chilling effect this new tax could have on home sales.
“Ontario home buyers are already charged a provincial land transfer tax, so by adding a municipal tax, they’re essentially doubling the tax burden on Ontario families,” Patricia Verge, president of OREA, said in a statement.
“If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year.”
However Pat Vanini, executive director of the Association of Municipalities of Ontario (AMO) said AMO thinks that Ontario’s municipalities should have the same options that Toronto has had since 2006.
Changes to the Municipal Act could happen as soon as in the 2016 spring session of the legislature. Meaning there could be a huge flurry of real estate transactions before the Municipal Land Transfer Tax takes effect. The big question is how big an impact could this tax have on the ever rising cost of home ownership.