What the new Toronto Land Transfer Tax means to you!

By
Real Estate Agent with Re/max Realtron Realty Inc., Brokerage




Details of Approved Toronto Land Transfer Tax

As I'm sure everyone has heard by now, the Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax.  For the past half year the Toronto Real Estate Board (TREB), along with its real estate members, have worked very hard to oppose this tax.  As a direct result, City Council was forced to make a number of amendments to the City's original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.

The City has not yet provided detailed information on administration or implementation issues. Based on
information currently available and with the help of TREB files, i've put together a short FAQ to help bring clarity to this confusing matter.

What was approved by City Council?
A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential:
· 0.5% of the amount of the purchase price up to and including $55,000
· 1% of the amount of the purchase price between $55,000 and $400,000
· 2% of the amount of the purchase price above $400,000
Commercial / Industrial / Etc.:
· 0.5% of the amount of the purchase price up to and including $55,000
· 1% of the amount of the purchase price between $55,000 and $400,000
· 1.5% of the amount between $400,000 and $40 million
· 1% of the amount above $40 million

When does this take effect?
February 1, 2008.

Are existing transactions grandfathered?
Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax. The City has not yet provided clarification on how rebates will be administered. If clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before
February 1, 2008?

Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008?
Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

Where does this apply?
The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.

Are first time home buyers affected?
First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how rebates will be administered. It is advised that if clients have concerns, they should check with their lawyer.

Once the City of Toronto provides clarification, more information will be provided.  If you have questions regarding the tax, contact the City of Toronto at Access Toronto at 416-338-0338.

Comments (2)

Gail Gladstone
Gladstone Group & Long Island Business Brokerage - Huntington, NY
Brokering Success
They are trying to pass a similar law in parts of Long Island, levied against the buyers.
Oct 23, 2007 05:20 PM
Mark Savel
Re/max Realtron Realty Inc., Brokerage - Toronto, ON

It's a terrible way of raising taxes, penalizes those who are helping the economy grow (home buyers) and is only truly effective when the market is strong. From my experience up here your best bet is to get as much media attention to oppose this tax as possible.

Good luck!

Oct 24, 2007 05:14 AM