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Families at every income level are finding it hard to pay for a home in Toronto and instead of helping, Toronto city councillors are making it harder by looking for ways to squeeze out new taxes.
City councillors Ana Bailao, Brad Bradford, and Joe Cressey announced they’re considering a new land transfer tax bracket for house sales over $3 million. The municipal tax currently tops out at 2.5 percent on homes over $2 million. This municipal tax is, of course, in addition to the provincial 2.5 per cent land transfer tax.
Lot - Money - Home - Land - Transfer
It adds up to a lot of money. On a $3 million home, the current land transfer tax is already $122,950. And unlike a mortgage, the land transfer tax is an up-front cost that needs to be paid right away. This tax-happy trio of city councillors is betting that people buying expensive homes won’t miss the money, but that’s not how it works and the impact ripples throughout the market.
The best way to help families find homes is to build more homes. Raising taxes on any part of the market makes it harder to build more homes. And ironically, land transfer taxes are also bad for government because they’re unreliable.
Immediate - Cost - Families - Homes - Families
By adding such a huge immediate cost to moving, families are less likely to move. They are more likely to stay in smaller homes even as their families grow. They are more likely to suffer through longer commutes or lengthy and expensive renovations to avoid the cost of moving.
A C.D. Howe Institute publication of the Toronto market found that the city’s land transfer tax resulted in a 16 per cent decrease in sales volume. Based on the number of sales of houses in Toronto as a whole, C.D. Howe estimates that the result is that 3,500 fewer houses are sold in the...
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