The tax ,when it was brought in by the government, was intended to be revenue neutral. It was supposed to offset the cost of running the land titles operation. The tax is based on the value of the purchase and is a sliding scale. The first $30,000 is untaxed and then the rate goes to .5% for the next $60,000. After $200,000 the rate is 2%. With the increase in the selling prices of homes over the last decade, this tax has become quite onerous, especially for first time buyers.
For example someone buying a home for $250,000 will pay $2650 in land transfer taxes, along with their deposit and down payment, legal fees and other disbursements. This tax helps to eliminate some people from being able to afford their first house. If you apply the same rate of increase to other commodities, a car purchased in 1987 would cost $117,300 in today’s market. Gas would cost $5.51 per litre and the minimum wage would be $55/hr.
This tax is not sustainable at this rate without greatly damaging the first time buyer market. We require a robust first time buyer market to keep the rest of the market healthy. The Manitoba Government should start taking a good long look at the effect of their taxation policies as it relates to the Land Transfer Tax.