It appears as though the Ontario government was listening to views expressed during Toronto's recent Land Transfer Tax Debate. One of the key outcomes was a compromise that included a full rebate for first-time buyers of homes and condos valued under $400,000, whether newly-constructed or resale. This differentiated the newly-introduced tax from the province's land transfer tax scheme, under which only first-time buyers of newly-constructed homes and condos qualified for the $2,000 rebate.
However, as of December 14,2007, the provincial government land transfer tax refund for first-time buyers will be extended to include resale homes. The provincial program exempts the first $227,500 of the purchase price for first-time buyers (as opposed to Toronto's threshold which is higher at $400,000).
This means that a first-time HomeBuyer purchasing a home for $400,000 in Toronto would be required to pay (after all rebates are applied) $2,475 in provincial land transfer tax and zero in Toronto land transfer tax. In contrast, all other HomeBuyers purchasing the same house would be required to pay around $8,200 in combined city and provincial taxes. (The Toronto Real Estate Board provides a simple calculator to approximate these tax amounts.)
From the press release:
The McGuinty government is giving all first-time homebuyers a break on land transfer tax by proposing to expand the Land Transfer Tax Refund Program to include purchases of resale homes, Finance Minister Dwight Duncan announced today.
"Expanding this Land Transfer Tax refund is an important part of our government's commitment to helping Ontarians buying their first home," Duncan said.
Effective midnight tonight, first-time buyers of resale homes, as well as newly constructed homes, would be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.
The expanded Land Transfer Tax Refund Program for First-time Homebuyers is part of a package of new tax initiatives announced in the 2007 Fall Economic Outlook and Fiscal Review that would provide $1.4 billion in provincial tax relief for business and people over three years. The government is making strategic investments in people, communities and infrastructure to strengthen Ontario's economic advantage and help manufacturers and other sectors challenged by current economic conditions.
For more information please visit: http://www.gov.on.ca/