The Ontario government is making good on their promise to address housing affordability, particularly for buyers wading into the property market for the first time. As part of Ontario's fall economic statement today, Finance Minister Charles Sousa gave voice to the ailing home buying climate across the province: “Purchasing your very first home is one of the most exciting decisions in a young person’s life, but many are worried about how they will be able to afford their first condo or house.” Offering renewed hope to dispirited young professionals dreaming of owning property, Sousa announced a new tax break for first time buyers.
Taking effect as of January 1st, 2017, the provincial government will be doubling the maximum Land Transfer Tax refund for first-time home buyers, from $2,000 to $4,000. This increased rebate will mean that Ontario home buyers will pay no Land Transfer Tax (LTT) on the first $368,000 of their first home's purchase price.
Let's look at the new numbers:
NEW Ontario Land Transfer Tax Rates
Home Purchase Price Tax Rate
Up to $55,000 0.5%
$55,000 to $250,000 1.0%
$250,000 to $400,000 1.5%
$400,000 to $2-million 2.0%
$2-million and over 2.5%
For a comparison of current rates versus the new modernized rates, we recommend today's MoneySense post: Ontario Doubles First-Time Homebuyer Tax Rebate.
Incredibly, the new tax break effectively means that many Ontarians won't have to pay any Land Transfer Tax at all! While the same can't be said for buyers in red hot property markets like Toronto, this financial boon will still have a resounding effect on the finances of young would-be property owners. Renters will also benefit, as the government freezes the property tax on apartment buildings. For a comprehensive look at the implications of today's announcement, we recommend the Financial Post coverage: Ontario Gives Rebates To First-Time Buyers.
These tax modifications fall in line with other significant policy changes announced in the past year, including Vancouver's 15% tax on foreign property buyers, new mortgage downpayment guidelines ( see our press on Canada's New Minimum Down Payment Requirements For Home Buyers, and September's major changes to mortgage borrowing rules, which we wrote about in A New Mortgage Rule For Canadians And How It Will Impact Borrowers. All seem aimed at deflating harmful market trends, while bolstering our economic foundation from below. “I am confident that we have made — and are making — the right choices to bring our province back to balance,” Sousa said.
So where will all of this cash come from? Taking a page out of Robin Hood's book, to fund the breaks, the government will increase land transfer rates on houses that cost more than $2 million. For every dollar over and above that margin, the rate will rise from 2 per cent to 2.5 per cent.
By allowing more Ontarians to participate in the real estate market, Sousa hopes to bolster economic growth, particularly in areas outside large city centres. And whether his goal of healing the economy and eliminating the deficit by next year is feasible or fantasy, today's announcement was certainly a positive start!
Are you a first time buyer in Toronto? Here's a must-read called I Need A Crash Course In First Time Home Buying!
And, if you're considering a purchase, here's a handy post called What Are The Closing Costs For A Property Purchase?
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The Urbaneer Team
Bosley Real Estate Ltd., Brokerage • (416) 322-8000
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