..... his residential real estate vulture culture not being able to feast as they have been for 20 plus years on the carcass of skyrocketing residential real estate prices.
Here's a hint buddy. Cut your fuckin' commissions. Clamp down on your industry's greed and complicity in fueling the rising price of the housing market.
Cost of the municipal land transfer tax will impact all homebuyers
For our housing market to remain healthy, we need to incentivize transactions, not penalize home sales with a new tax.
By Christopher Alexander Contributor
Monday, September 25, 2023
There’s no doubt that action is needed to improve Toronto’s financial situation; however, increasing the municipal land transfer tax will serve only to erode housing affordability further. To those who believe that the tax hike will only impact the luxury-home owners “who can afford the increase,” think again.
I agree that balancing the city’s budget is a heavy burden, but it’s not one to be carried by homeowners. For our housing market to remain healthy, we need to incentivize transactions, not penalize them. In truth, the revenue boost earned through more land transfer tax will have some significant and long-lasting impacts on Toronto’s residents and market. It will mean fewer listings in a city where housing supply is already low, and higher prices in a market that is already expensive.
The cost is substantial.
The average price for a home sold in the Greater Toronto Area so far this year was $1,134,781 (to Aug. 31, 2023). The total land transfer tax for this purchase price adds an extra expense of $38,341.20 to buyers; half of which goes to the province ($19,170.62) and half to the city of Toronto. On the surface, this is significant revenue, and revenue the city needs, but in the mid-to-long-term there’s a greater cost to both affordability and inventory.
Through a higher municipal land transfer tax, the luxury homeowner is being disincentivized from listing their property. This impact trickles down to move-up buyers, who now can’t find homes to move up into; to first-time buyers who are challenged in finding a home to accommodate a growing family; and renters who are holding their breath as they struggle to get their foot in the door of home ownership. Incentives like the federal first-time Home Buyers’ Tax Credit and the municipal/provincial first-time buyer land transfer tax rebates are great, but useless if the buyer can’t find a home for sale.
Since the municipal land transfer tax was introduced in 2008, it’s questionable whether it’s even serving its purpose. Residential prices and the number of transactions have spiked, yet, we find ourselves in arguably the most dire affordability crisis
Toronto has ever experienced, trying to find a way to fill a massive $1.5-billion hole. For context, as of 2021, according to the Toronto Regional Real Estate Board , Toronto home prices have increased by approximately 140 per cent since 2008, while the municipal land transfer tax collected by the city on the average priced home has increased by 340 per cent, more than double the rate of housing price inflation in the city over that period.
In Canada, home ownership continues to be one of the best long-term investments, and governments have a responsibility to ensure they’re exploring all options to keep this dream alive and achievable. Taxing buyers is a Band-Aid solution that fails to address the root of the problem — the housing shortage. And we haven’t even touched on the fact that Canada’s population and housing needs are growing, having increased more than a million people for the first time in history in 2022, a big portion due to a surge in immigrants and temporary residents, many of whom look to reside in the GTA.
Think about putting a cap on the municipal land transfer tax. This could be based on the average price point for any property in Toronto in 2008, when the municipal land transfer tax was first introduced, which was $379,080. Doing this would ensure municipal land transfer tax costs are predictable for would-be sellers and don’t fluctuate with the market. Beyond that, explore other revenue-generating ideas, and hold provincial and federal government’s feet to the fire, to cover their share of expenses.
Stop putting the squeeze on homeowners. They are already contributing enough to the city budget. Before the municipal land transfer tax comes into effect in January, I would caution government leaders to think twice, and invite them to consider all potential impacts, now and for years to come.
Christopher Alexander is president of RE/MAX Canada.
Here's a hint buddy. Cut your fuckin' commissions. Clamp down on your industry's greed and complicity in fueling the rising price of the housing market.
Cost of the municipal land transfer tax will impact all homebuyers
For our housing market to remain healthy, we need to incentivize transactions, not penalize home sales with a new tax.
By Christopher Alexander Contributor
Monday, September 25, 2023
There’s no doubt that action is needed to improve Toronto’s financial situation; however, increasing the municipal land transfer tax will serve only to erode housing affordability further. To those who believe that the tax hike will only impact the luxury-home owners “who can afford the increase,” think again.
I agree that balancing the city’s budget is a heavy burden, but it’s not one to be carried by homeowners. For our housing market to remain healthy, we need to incentivize transactions, not penalize them. In truth, the revenue boost earned through more land transfer tax will have some significant and long-lasting impacts on Toronto’s residents and market. It will mean fewer listings in a city where housing supply is already low, and higher prices in a market that is already expensive.
The cost is substantial.
The average price for a home sold in the Greater Toronto Area so far this year was $1,134,781 (to Aug. 31, 2023). The total land transfer tax for this purchase price adds an extra expense of $38,341.20 to buyers; half of which goes to the province ($19,170.62) and half to the city of Toronto. On the surface, this is significant revenue, and revenue the city needs, but in the mid-to-long-term there’s a greater cost to both affordability and inventory.
Through a higher municipal land transfer tax, the luxury homeowner is being disincentivized from listing their property. This impact trickles down to move-up buyers, who now can’t find homes to move up into; to first-time buyers who are challenged in finding a home to accommodate a growing family; and renters who are holding their breath as they struggle to get their foot in the door of home ownership. Incentives like the federal first-time Home Buyers’ Tax Credit and the municipal/provincial first-time buyer land transfer tax rebates are great, but useless if the buyer can’t find a home for sale.
Since the municipal land transfer tax was introduced in 2008, it’s questionable whether it’s even serving its purpose. Residential prices and the number of transactions have spiked, yet, we find ourselves in arguably the most dire affordability crisis
Toronto has ever experienced, trying to find a way to fill a massive $1.5-billion hole. For context, as of 2021, according to the Toronto Regional Real Estate Board , Toronto home prices have increased by approximately 140 per cent since 2008, while the municipal land transfer tax collected by the city on the average priced home has increased by 340 per cent, more than double the rate of housing price inflation in the city over that period.
In Canada, home ownership continues to be one of the best long-term investments, and governments have a responsibility to ensure they’re exploring all options to keep this dream alive and achievable. Taxing buyers is a Band-Aid solution that fails to address the root of the problem — the housing shortage. And we haven’t even touched on the fact that Canada’s population and housing needs are growing, having increased more than a million people for the first time in history in 2022, a big portion due to a surge in immigrants and temporary residents, many of whom look to reside in the GTA.
Think about putting a cap on the municipal land transfer tax. This could be based on the average price point for any property in Toronto in 2008, when the municipal land transfer tax was first introduced, which was $379,080. Doing this would ensure municipal land transfer tax costs are predictable for would-be sellers and don’t fluctuate with the market. Beyond that, explore other revenue-generating ideas, and hold provincial and federal government’s feet to the fire, to cover their share of expenses.
Stop putting the squeeze on homeowners. They are already contributing enough to the city budget. Before the municipal land transfer tax comes into effect in January, I would caution government leaders to think twice, and invite them to consider all potential impacts, now and for years to come.
Christopher Alexander is president of RE/MAX Canada.
