Home Buying Tax Proposal Poses Danger for First-Time Buyers
By Lucas on Dec 12, 2013
By Penny Munoz
In a press release earlier this week, the Toronto Real Estate Board (TREB) expressed its concern about a potential proposal that would have first-time home buyers in Toronto paying more than they already do in Home Buying Tax (Land Transfer Tax).
According to the release, the City Budget Committee’s comments suggest that they may be considering a proposal that would eliminate the Toronto Home Buying Tax on the first $200,000 of the value of a property, benefitting all home buyers. However, the same proposal would also eliminate a rebate that relieves first-time home buyers from paying Home Buying Tax on the first $400,000 value of a property.
"REALTORS® are encouraged that the City's Budget Chief and Budget Committee are actively considering options to provide relief, to home buyers, from the Home Buying Tax; however, we believe strongly that all Toronto home buyers deserve relief from this hurtful tax, including first- time home buyers," said Dianne Usher, TREB President.
In a letter to the City’s Budget Committee, TREB highlighted the additional difficulties home buyers would face without relief from this tax. First-time home buyers are already subject to pay thousands of dollars in Home Buying Taxes because the rebate only extends to the first $400,000. TREB pointed out that since the average price of a Toronto home is $570,000, about 40 percent of first-time home buyers pay Home Buying Taxes.
"Even first-time home buyers purchasing BELOW average-priced properties are being forced to pay thousands of dollars in Toronto Home Buying tax. Any proposal to eliminate the first-time buyer rebate would make this situation worse. First-time home buyers deserve more relief, not less," said Von Palmer, TREB's Chief Government and Public Affairs Officer.
With the cost of homes continuing to rise, TREB representatives said that this rebate should be adjusted to the pace of inflation, rather than being eliminated, creating greater opportunities for new home buyers. If the rebate was eliminated, it would dramatically hinder new home buyers, excluding many people from being able to afford homeownership.
"We have pointed out many times that the Home Buying Tax hurts people when they can least afford it. First-time home buyers are a perfect example of this. Many first-time home buyers struggle to save for a down payment for that first home they are dreaming of. Every penny counts to them, and the Home Buying Tax makes that dream more difficult to achieve," said Usher.
