<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=294326554740919&ev=PageView&noscript=1" /> Scrap the Tax - Wilson Sisters

Scrap the Tax

24 May 2012
Wilson Sisters

“We were thinking about moving but then we learned that the Toronto land transfer tax applies to each sale in Toronto, not just when you move to Toronto from another city like we did when we bought our current house. Knowing that now, we think we’ll stay put and renovate.”

This is a piece of an actual conversation that I had recently with a mom on a park bench while the kids tore it up one afternoon, and not an uncommon sentiment it seems. I remember CMHC reported in their market outlook last quarter that renovation spending in the GTA was at an all time high, though I don’t have the exact figures, and that made a lot of sense to us. From experience, our past clients it seems, even as their families grow and they are busting out of their townhomes and small semis, are making a choice to stay put for as long as they can possibly hold out, choosing to try to make their current homes work instead of upgrading. In fact, my own family, growing by one more in August, is about to become 6 people living in 4 bedrooms, and we’re a 2 car family with one parking spot which causes some grief. Both of these are reasons I’d love to start looking around next year for a home that makes more sense for us, but will we? Nope. Not a chance. The land transfer tax alone is astronomical. There is no way we’d consider paying it for the sake of an extra bedroom and parking spot. We’ll make do. We’re lucky- for us, ‘making due’ means a couple of kids sharing a room (oh no!) and having to drive around searching for the elusive and sometimes non-existent second parking spot. For some of our past clients, making due is a lot more of a sacrifice as they try to ram their kids into spaces that once worked so well for a young professional couple on the go.

I read an article in The Star recently discussing the shortage of single family homes in Toronto and the resulting bidding wars as buyers try to purchase one. I thought the article was spot on. They gave a few good reasons as to why we’re in a shortage, and what the shortage is doing to our home values, and they did briefly mention the land transfer tax and expensive closing costs as a reason that people just aren’t selling their homes like they used to- they are making due. Move-up buyers from condos are ready and aggressively trying to buy houses, but it’s been an uphill battle for them.

The average price of a single family home in Toronto in April was $568,436, and the land transfer tax total on that is $14,937. That price range usually applies to first and second time home buyers, and this is a large amount of money for a lot of them as they save for their purchase. Most of our past clients who would be looking to move up and are hesitating, are not looking at homes in that price range any longer and would be aiming to make a move to a larger and possibly detached home, which has an average cost of $831,214 and a land transfer tax total of $25,448!! Maybe a bit of a deterrent to making a move?

We think it’s time to scrap the tax. Toronto is in a budget surplus situation after collecting $300 million in land transfer tax last year, WAY over the expected amount, and all the while they were still cutting services. The Star reports that they are “confounded” by the windfall. We think it’s completely unfair to place the tax burden on the shoulders of buyers who are looking to buy a home that they want or need. We wonder also what the loss of tax revenue would be from the sales that don’t happen BECAUSE of the tax- buyers who move to the 905 or don’t buy at all because of the extra tax.

Has the Toronto Land Transfer tax been a deterrent for you in your decision to move?