Ontario Land transfer tax an election issue
The imposition of the provincial land tax would most likely result to reduction of home sales and a slower rate of economic activity. With this in mind, the Toronto Real Estate Board has lobbied in the last two years for the removal of the said tax.
It is interesting to note that the provincial land tax was never introduced in any other city in Ontario, though they may have the power to do so. In Toronto, the tax has continued to penalize home-buyers who are faced with spiraling increases in home prices.
The reason Toronto cannot stop this tax imposition is because the city needs it.
The tax angle is heavy. Toronto home-buyers who are buying for the first time do not pay land transfer tax when the purchase price is $400,000 or less. However, any home above this pegged rate must pay $3,725; and around $15,425 for homes that are bought for more than one million dollars. This is on top of the land transfer tax that is imposed by Ontario in the amount of $16,475; thereby, the total tax payable can reach to $32,000 for land transfer tax alone on homes that are bought for a million dollars today.
The issue on taxes have become a platform for those vying for mayor in the city. The present Mayor, Rob Ford plants to impose a tax cut of five percent across the board. Candidate Karen Stitz opts to impose a higher tax rate on higher valued properties to make the taxes equitable. Another candidate, David Socknacki, would impose taxes based on the rate of inflation; while John Tory, has not stated his platform on taxes yet.
Suggestions for candidates to make the industry better follows:
Reduce by ten percent all taxes across the board. There should be a change in policy where no one pays taxes for homes worth $400,000 and below, whether or not you owned a home before.
Credit of $5,725 must be granted for first time home buyers. Land transfer taxes should not be imposed on homes that are priced at $500,000 and below.
Rebate should be given to all first time homeowners in the Toronto area, whether they have homes elsewhere in Ontario or not.
Things to consider regarding land transfer tax
—-Rebates on First Time Buyer
If you buy your first home in Toronto, you are entitled to a $3,725 rebate for your 2nd home; if you buy outside of Toronto, you may pay only one tax but would be entitled to a $2,000 rebate. It is then advisable to buy your first home in Toronto and use the 2nd rebate of $3,725 to buy the property elsewhere. When you buy your first home outside of Toronto and decide to live in Toronto later, you will be subjected to a double tax without rebate.
—-Rules on Spousal Ownership
Taxes pertaining to common dwelling units owned by spouses would have different tax implications. If your spouse owns a house while being married to you, you are not entitled to a first buyer rebate, even if you have not bought a house before. If your spouse and you decides to buy a house, you shall be entitled to a 50 percent tax rebate which is $1,000 in Ontario and &1,812.50 in Toronto. However, if you decide on owning 99 percent of the home, and your spouse only one percent, then you would be entitled to a 99 percent rebate that would equal to $1,980 in Ontario and $3,692.75 in Toronto.
Transfer of property
In case you decide to transfer title of the property to your spouse, for reasons of love and affection, land transfer taxes will not be paid. If the property is transferred to a child, and there is no encumbrance or lien attached to it, no land transfer tax needs to be paid. However, if the property is worth $500,000 and say $200,000 is encumbered, land transfer taxes would have to be paid on the $200,000. Understanding the intricacies of land transfer taxes on properties can help the homeowner save a lot of money.