GREATER TORONTO AREA REAL ESTATE BLOG
Toronto land transfer tax & its effect on GTA
TORONTO LAND TRANSFER TAX
February 1, 2008 GTA’s 416 area saw its Toronto land transfer tax roughly double on most real estate sales. Today, five and a half years later , what we’ve learned is that those who are aware of this ‘added tax’ will think harder before making a purchase in Toronto’s 416 area. To be more precise, Ipsos-Reid poll shows that 80% of those who are planning to purchase a property in the near future said that Toronto’s Municipal Land Transfer Tax levy has influence on their decision when thinking of buying in Toronto. This means Toronto’s land transfer tax, while might be 416’s pain, has proven to be 905’s gain! While on the other hand towns like Richmond Hill, Markham, Aurora, Mississauga, & so on are benefiting from this so called issue (for now!).
Toronto Land Transfer Tax Calculation
Inputting a purchase of $500,000 in the form above will show that Provincial LTT grab will be $6475. However, if the purchase was made in 416 area you would have to shed another $5725. LTT payment is something you typically have to pay out of your pocket, and is not something that is added to your mortgage. What would be the opportunity cost of this? You could possibly spend that money on new appliances, or may be renovations. It is something to consider, because when you end up selling your 416 property, the buyer might be facing the same dilemma. This, however, doesn’t mean that you should be staying away from 416 properties, rather you should be aware of the added cost.
Polls over the last few years show that places like Richmond Hill, Hamilton, Vaughan and other 905 areas have seen more robust sales compared to those in Toronto’s 416 area, and in my mind no doubt that Toronto’s land transfer tax has a lot to do with it. In the same recent poll only 23% of 905 residents were in favour of the similar tax hike for their city, but whether it will be implemented or not is yet to be seen. I believe sooner or later other cities will follow suit, it is just a matter of time.. and my gut feeling tells me Mississauga will be first!
Subscribe to our real estate newsletter
- Bidding wars – Love Them? Or Hate Them?
- Toronto Real Estate “Stock Market”
- Why Buying a Condo is likely NOT in ‘Your’ best interest!
- Greater Toronto Area Spring 2014 Market Report
- Tips For Landlords on Finding the Right Tenant
- 5 Years Later – How & Why Canada avoided the Housing Market Crash
- Too Much Debt?