Toronto Land Transfer Tax Approved

Rachel in Urban Issues, Home Buying, Legal, Money

Councillor Thompson dropped a stack of over 1,000 sheets of paper at the start of the meeting and announced they represented ‘no’ votes to the mayors proposed tax increases.

People cheered.

He also dropped a stack of paper, smaller, representing voters who supported an increase in the land transfer tax.

Miller supporters showed up to this meeting wearing yellow scarves, a show of solidarity. Apparently, this was designed to represent the fact that yellow-scarf wearing people were in favour of an increase on land transfer taxes. Interested, I asked:

Me: Why are you wearing a yellow scarf?
Guy: The union.
Me: Are you serious?
Guy: Well, you know, for support.
Me: What do you support?
Guy: You know, the mayor.
Me: This meeting is for the councillors to vote on new taxes.
Guy: Oh.

The tax increase was approved.

My counselor, Mr. Ootes (who voted against), was quoted in the Globe and Mail , “He won the vote, but he lost the city."

Thankfully, concessions were made for first time Home Buyers, and the exemption for this group includes resale transactions as well as new construction.

The breakdown is as follows:

The Home Buyer will pay a tax to the city, in addition to the tax paid to the province, based on the purchase price of the property:

0.5 per cent on the first $55,000

1 per cent on the value between $55,000 and $400,000

2 per cent on the amount greater than $400,000

Here is an example of what this will look like:

Purchase price $400,000
Toronto Tax $3,725
Ontario Tax $4,475

Total Tax $8,200

Agreements of purchase and sale that have been signed prior to Dec. 31, 2007 will be exempt from the new Toronto tax, but the provincial tax will still apply.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law. Email Rachel

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Comments

[alex]

To make it clear,Does it mean that because I have signed an agreement of purchase and sale in 2005 on a new townhouse but not a first time home buyer and my closing date is not until May of 2008 menas that I am exempted from the new toronto land transfer tax?
Please reply
Thank You,
alex

[Toronto Mortgage Broker]

Hi Rachel, It's kid of sad that they may still have to raise proerty taxes. Do you know if the closing date matters? In other words, if you sign by Dec. 31 but don't close until 2011 are you still exempt from the new land transfer tax? Melanie

[Rachel Loizos]

Hi Alex and Melanie,

I will answer you both because I believe you have similar concerns. It appears (and although I attended the meeting, I have not seen the actual documents) that because you have signed your respective agreements of purchase and sale prior to the December 31, 2007 cut-off date, you will be exempt. The closing date does not appear to be the relevant date.

I will be looking out for the specifics in the implementation and will likely blog about them as they come across my desk.

Thanks,
Rachel

[Toronto Mortgage Broker]

Thanks Rachel!