WinnipegREALTORS® is calling on the provincial government to provide relief
to home buyers in its upcoming March 25th provincial budget by modifying the significant
revenues it generates on property purchases in this province. The province has seen its LTT
revenues increase from $31.0.million in 2006 to $44.8 million in 2008, a 44% increase.
In a November 2007 land transfer tax study done by Will Dunning, the chief economist of the
Canadian Association of Accredited Mortgage Professionals (CAAMP), he made the following
"The amounts of these taxes have increased rapidly during the past decade. The increases have
been even more rapid because the taxes are calculated based on sliding scales, and the brackets
for those scales have not been adjusted."
In each of the four provinces he compared - Quebec, Ontario, British Columbia and Manitoba -
he showed from 1997 to the first nine months in 2007, the LTT payable had gone up more
rapidly than house prices. Based on Manitoba's average resale price of $168,421 in 2007
compared to $85,404 in 1997, the amount of LTT payable in Manitoba increased a whopping
358%, versus the 97% house price rise. Dunning said this is far in excess of any reasonable
estimate of costs to operate the provincial land registry system. The percentage increases for the
other three provinces were B.C at 179%, Quebec at 136% and Ontario at 113%.
His final conclusion based on the 2007 study he conducted is that ... "the taxes levied on land
transfers are far in excess of any social or governmental ‘costs' that result from the activity of
home buying and therefore these discriminatory taxes are not justifiable."
One important exception Will Dunning failed to mention in his study in respect to provincial
governments making adjustments to the sliding scales they use to arrive at what a purchaser will
owe them, is that in 2004 Manitoba quietly increased the over $200,000 bracket from 1.5% to
2.0%. This has meant a real windfall in revenue due to the dramatic increase in upper end market
activity in the last few years. If you go back to 2004 and compare home sales above $200,000
then to 2008 it shows a dramatic difference. There were 4,266 sales in 2008 compared to only
1,095 in 2004. Those 4,266 sales over $200,000 represented 45% of total MLS® home sales in
2008 compared to the 1,095 home sales in 2004 being just 12% of total MLS® home sales.
Moreover, WinnipegREALTORS® MLS® numbers show between 2006 and 2008, there was a
142% increase in homes selling for over $300,000 - 1,283 versus 529. As a result this means the
government in 2008 generated a minimum of $2,000 on each of those 1,283 sales, just on the 2%
tax applied to the $100,000 difference between $200,000 and $300,000. One of the homes
illustrated here shows just how much higher the home buyer tax is from the inception of the land
transfer tax inception. It has gone from $3,250 in 1987 to $15,690 in 2008.
Just as the federal government has recognized the importance of the housing sector as a key
economic driver in our economy and brought in new measures in their January economic action
plan to stimulate housing activity, WinnipegREALTORS® proposes the provincial government
similarly stimulate our local housing market by providing relief to home buyers. Note: There was
$300 million worth of economic spin-offs from MLS® sales in 2008.
Our proposal is as follows:
Our proposal is as follows:
Change the current land transfer tax where Manitobans are exempt on the first $30,000 of sale
price, pay .5% from $30,000 to $90,000, 1% from $90,000 to $150,000, 1.5% from $150,000 to
$200,000 and 2% on the sales price portion above $200,000 to .5% from 0 to $100,000, 1% from
$100,000 to $200,000 and 1.5% for any amount over $200,000 to $500,000.
There would be a cap at the half million dollar level. Any sale above $500,000 still generates
$6,000 in revenue for the province.
In addition, the government should seriously consider bringing in a first time home buyer
exemption as B.C. and Ontario have already done. Alberta and Saskatchewan do not even have a
land transfer or home buying tax.
B.C.'s threshold for first time home buyers is $425,000. It was raised from $375,000 in February
2008. Ontario has a threshold of $222,000, which means the first time homebuyer pays $975 in
LTT on a $300,000 home.
"A first time home buyer exemption will encourage young Manitobans to stay in Manitoba," said
Don Cook, chair of WinnipegREALTORS® Civic and Legislative Affairs Committee. "It is hard
enough already for them to come up with the necessary money to make a decent down payment
and meet all of their closing costs."
Unlike the newly announced Federal First Time Home Buyer's Tax Credit incentive, an
exemption for first time home buyers on Manitoba's LTT will have an immediate impact. Buyers
saving down payment and closing cost monies will be able to make their purchase rather than
waiting for many months while they save after tax dollars.
"It is really important to understand the Manitoba Land Transfer Tax is an additional closing cost
a purchaser must come up with before taking possession of a property," said Cook. "You cannot
add it to your mortgage like you do with the CMHC insurance premium on a 5% down purchase.
First time buyers are least able to afford this extra cost."
"Our bottom line is the provincial land transfer tax makes home buying more costly," said Cook.
"In times when the economy is going through a slowdown the government should do anything in
its power to support a key sector of the economy that creates millions in economic spin-offs and
Modifying the land transfer tax in the upcoming budget will be a signal to Manitobans the
government is sensitive to the challenges facing us and it will mitigate against buyers moving to
the sidelines in greater numbers than necessary due to economic uncertainty.
Owing to Manitoba's extremely low vacancy rate for good rental accommodations, a real benefit
to motivating first time buyers to enter the home ownership market this year will be the freeing
up of badly needed rental units for new immigrants and other Manitobans. It also allows first
time sellers to move ahead with their plans to buy another home more suitable to their present
Established in 1903, WinnipegREALTORS® is a professional association representing over
1,500 real estate brokers, salespeople, appraisers, and financial members active in the Greater
Winnipeg Area real estate market. Its REALTOR® members adhere to a strict code of ethics
and share a state-of-the-art Multiple Listing Service® (MLS®) designed exclusively for
REALTORS®. WinnipegREALTORS® serves its members by promoting the benefits of an
organized real estate profession.