Land transfer taxes directly impacting housing supply

The latest in a series of poll results released by the Toronto Real Estate Board reports that a majority of Greater Toronto Area residents oppose the idea of new municipal land transfer taxes.

Toronto is the only municipality with its own land transfer tax (in addition to the provincial land transfer tax). TREB found that 79% of Torontonians support reducing the tax and 70% want to see it repealed completely.

The average selling price in the GTA in August 2018 was $765,270. According to the TREB land transfer tax calculator, the provincial land transfer tax on a home of this price would be $11,780, and the Toronto land transfer tax would be the same amount! That’s more than $23,000 in taxes just for moving to a home in Toronto.  

A separate C.C. Howe Institute study says that the Toronto land transfer tax is directly responsible for the housing supply shortage by about 16% a year. People put off moving because once they factor in the land transfer taxes, the expense can be too much to handle

There’s also been rumours of new municipal land transfer taxes being implemented outside of Toronto in other areas of the GTA. TREB found that 75% of GTA residents outside of Toronto oppose new municipal land transfer taxes. The greatest opposition was in Durham with 83%; Peel and Halton followed with 74% opposed; and York with 72% opposed.

“Housing supply and choice is the key housing issue that municipal candidates should be addressing during this municipal election campaign,” says Garry Bhaura, President of the Toronto Real Estate Board. “It’s a complex issue with many factors influencing it, not the least of which are land transfer taxes.

He adds, “The policy paper we are releasing today points out that the impact of these taxes isn’t just the substantial sum that it adds to the upfront closing costs for homebuyers; perhaps even more significantly, it impacts the availability of homes for sale that purchasers can choose from because many current homeowners choose to stay put instead of moving when they consider their transaction costs, of which land transfer taxes are often the biggest part.”

The policy paper calls for the Toronto land transfer tax to be adjusted “for inflation so that first-time buyer rebates and the tax rates reflect current market realities.” It also opposes any new municipal land transfer taxes outside of Toronto.

“We want municipal candidates in Toronto and the GTA to understand the full impact of land transfer taxes on the real estate market,” says John DiMichele, Chief Executive Officer of TREB. “During the 2017 Toronto budget process, under the leadership of the Mayor’s office, an important adjustment was made to the first-time buyer rebate to ensure that it kept pace with proposed changes. We applaud the mayor for recognizing that need, and we hope to work with the new City council on further adjustments to limit the negative effects of this tax on housing supply and choice.”