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Toronto Considering Raising Land Transfer Tax
– ratesupermarket.ca
Toronto considering raising land transfer tax
In an effort to find new revenue streams, the City of Toronto is looking at raising the rate of its Municipal Land Transfer Tax (MLTT) on home sales. The proposed hike would add an additional $750 in closing costs to the average home, and would add an estimated $100 million to city revenues annually.
A one of a kind deal
Toronto is unique among Canadian cities in that it is the only one that charges a land transfer tax on real estate transactions. This is on top of the provincial land transfer tax. The city started charging MLTT on sales effective February 1, 2008. The tax is calculated on a graduating scale:
0.5% on the first $55,000 of the sale price
1% on any value between $55,000.01 and $400,000
2% on the total amount exceeding $400,000.
Also read: The New Mortgage Rules: One Month Later
The proposal would increase the percentage charged on values between $55,000.01 and $400,000 to 1.5%.
At current rates, on a home valued at $500,000, the MLTT is $5,725…
That’s according to a survey from Mortgage Professionals Canada, a mortgage brokers’ industry group, which found it now takes 102 weeks, on average, to save up for a 20-per-cent down payment, double what it was 15 years ago.
The number of weeks it would take to save up for an average house, if you saved all your income, based on Canada’s average weekly wage. (Chart: Mortgage Professionals Canada)
But that 102 weeks number shouldn’t be taken literally. It’s “a simplistic presentation, as potential first-time homebuyers do not save all of their income (obviously),” wrote Will Dunning, Mortgage Professionals’ chief economist. “Moreover, most of them do not have average incomes or buy average-priced homes. In consequence, actual times required to accumulate down payments will vary.”
Dunning noted that monthly mortgage payments have been stable in recent years even as house prices rose, because mortgage rates have been falling…
