Not many good things can be said about Toronto’s Home Buying Tax, the Land Transfer Tax, but one thing that is worth mentioning is that City Hall gives first-time home buyers some relief from this unfair tax with a rebate of up to $3,725 (the amount payable on a $400,000 home). Unfortunately, that could change if a potential proposal to eliminate this rebate is approved by City Council.
REALTORS® have been working hard to convince City Council to start phasing out the Toronto Home Buying Tax for all home buyers. In fact, we recently made a presentation to the City’s Budget Committee to tell them that home buyers need to be a priority in the City’s 2014 budget, and that means starting to cut the Home Buying Tax. The Budget Committee heard this message and recently it was announced that the City’s Budget Chief intends to bring forward a proposal to cut this tax by five percent for all home buyers. That is good news. Unfortunately, the Budget Chief also suggested that he may consider a proposal to eliminate the rebate for first-time home buyers at the same time. That means that first-time home buyers would pay more than what they do now, even with a five percent cut in the tax.
REALTORS® are encouraged that the City’s Budget Chief and Budget Committee are actively considering options to provide relief to home buyers from the Home Buying Tax; however, we believe strongly that all Toronto home buyers deserve relief from this hurtful tax, including first-time home buyers.
Many first time home buyers are already being forced to pay thousands of dollars in Home Buying Tax because the first-time buyer rebate has not kept pace with inflation. Currently, this rebate caps out on a $400,000 property, but the current average price of a home in Toronto is approximately $570,000 and rising. As a result, approximately 40 percent of first-time buyers pay some Home Buying Tax to City Hall. Even first-time home buyers purchasing below average-priced properties are being forced to pay thousands of dollars in Toronto Home Buying Tax. Any proposal to eliminate or reduce the first-time buyer rebate would make this situation worse. First-time home buyers deserve more relief, not less.
REALTORS® have told City Hall many times that the Home Buying Tax hurts people when they can least afford it. First-time home buyers are a perfect example of this. Many first-time home buyers struggle to save for a down payment for that first home they are dreaming of. Every penny counts to them, and the Home Buying Tax makes that dream more difficult to achieve.
It is good news that the City’s Budget Chief is planning to bring forward a plan to cut the Home Buying Tax, but all home buyers, including first-time home buyers, should get relief. Expecting first-time home buyers to pay more tax when they can least afford it is the wrong approach. If you agree, go to www.LetsGetThisRightToronto.ca where it will take you less than a minute to make your voice heard at City Hall.
Dianne Usher is President of the Toronto Real Estate Board, a professional association that represents 37,000 REALTORS® in the Greater Toronto Area.