As many of us know, Toronto--authorized by the Ontario Government--has approved a Land Transfer Tax that mirrors Ontario's Land Transfer Tax.
This new tax for buying a home in Toronto doubles the amount of tax a buyer has to pay on closing.
On an average price in Toronto of $387,000, Ontario's Land Transfer Tax amounts to $4,275. With the new Municipal tax this amount doubles to a whopping $8,550.
So what does this have to do with us in Niagara? Plenty
- Other municipalities will lobby the provincial government to amend the current Municipal Act to give them the same taxing authority. They are notorious for this practice.
- Home buyers will be asked to fund services that all taxpayers benefit from, a discriminatory practice.
- Home buyers will have to reduce their down payment to pay this tax, which will cause them to pay higher mortgage insurance premiums and additional mortgage interest.
- Some home buyers would be forced out of the marketplace which negatively affects sellers.
- The tax represents significant amounts of money at a time most people can least afford it, given other purchase demands.
- "According to a study conducted by Clayton Research for the Canadian Real Estate Association, each re-sale housing transaction in Ontario generates approximately $27,000 in spin-off spending for things like furniture, appliances, renovations, etc." Re-sale real estate sales have contributed billions per year to our economy. A 2nd land transfer tax will impact our economy negatively.
The necessary costs of buying a home already add up to a significant amount. There are:
- Pre-closing costs, such as Mortgage Application Fees, Appraisal or Mortgage Insurance Fees & Inspection Fees.
- Closing costs, such as Legal Fees and Disbursements, Title Insurance and Closing Adjustments.
All are essential costs to protect a buyer's interests and confirm the ability to buy.
Over and above these costs, a buyer pays Ontario Land Transfer Tax. The Average Price in the Niagara Region, now around $208,000, triggers a tax of $1,805.
If the Region or Niagara Municipalities demand and receive similar authority, then mirror the Ontario tax formula, a home buyer will pay $3,610, based on the average current price today.
We are all home buyers at some point. Do we want to be victimized by a 2nd buying tax?
I would welcome your comments.