Tuesday, November 24, 2015

Double Taxation - Ontario to Allow Municipalities to Charge Land Transfer Tax

The Ontario Ministry of Municipal Affairs and Housing has indicated they are extending the power of municipalities across the province to charge a land transfer tax according to the Ontario Real Estate Association.

Source: Orea Blog

This additional cost of buying a home, already in place in Toronto, would double the effective tax and could add thousands of dollars to the cost of buying a home in the province.

“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,” said Patricia Verge, president of OREA. “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.”

Here is the breakdown of existing land transfer tax rates in Ontario:
  • 0.5% up to and including $55,000
  • 1% above $55,000 up to and including $250,000
  • 1.5% above $250,000
  • 2% above $400,000 where the land contains one or two single family residences.
So with an Ontario average sale price around $470,000, you are talking about $5875 for land transfer tax and an effective rate rate of approx 1.24%. With this doubling to include municipal land transfer tax we are talking about $11,750 or an almost 2.5% tax rate. This is not an inconsequential amount and will add a significant burden to homebuyers and the housing sector which is a large segement of our economy.

Next week we are going to be talking about the ramification of this potential tax.

In the meantime, we encourage all Ontarians to visit www.donttaxmydream.ca to learn more about the negative impact of the MLTT and stop this tax from spreading province-wide.

Russel Lalovich
Office: (519) 966-0444
Cell: (519) 995-5620

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