If you’ve so much as picked up a newspaper in the last week or two, you’ve likely read about changes being made to Ontario’s land-transfer tax, specifically in regard to first-time homebuyers. Chances are you didn’t even have to flip to the real estate section either. It was probably front page centre. That’s how buzz-worthy the amendments are being received.
Here’s the short of it: As of January 1st, 2017, Ontario will be doubling the rebate on the land-transfer tax for first-time homebuyers. The new amount? A generous $4,000. The flip side of that coin is that they will also be increasing the same tax on homes which sell for over $2 million.
What does this mean for you?
Simple. If you’re a first-time homebuyer, you won’t pay any land transfer tax on the first $368,000 of a purchase price. Finance Minister Charles Sousa is touting this as an “incentive” and “added boost” in regards to your ability to afford a house.
Furthermore, less than 1% of the population will be affected by the half-percentage increase in homes over $2 million.
Over $2.1 billion a year is what Ontario hauls in from the land-transfer tax. The government claims any increase in revenues from the hike on luxury homes will assist in paying for the doubled rebates for first-time buyers.
The real question you are probably pondering is whether this is good news or bad news…
Unlike the double-edged sword of most new real estate rules or regulations or general revisions, this certainly has to be seen as a positive development. The tax break will reduce a first-time buyer’s closing costs and help them save more for their down payment
In the Greater Toronto Area, the current average price per home is $762,975 and climbing. First-time homebuyers are being especially affected, and this is the Ontario government’s way of taking action. Baby steps they may be, but they’re steps in the right direction nonetheless
Home ownership after all has become a decisive factor in the long term financial security of many Ontario residents. And simply put, the intention of these changes is to help more first-time buyers get into Toronto’s hot housing market. Coupled with the city’s own land-transfer tax—which offers those same first-time buyers rebates of up to $3,725—it all adds up to progress.
To that end, the Ontario government has also announced they will be reviewing how property taxes affect rental market affordability, and have frozen them in the meantime.
Sure, the negative outlook could be that given the fiercely escalating home price gains in Toronto and surrounding regions, such a rebate would hardly make a dent in easing affordability factors. It could conversely, in many respects, add more fuel to the housing fire.
But we choose to focus on the positives and so should you. The Ontario government isn’t claiming to offer anything profound or game-changing here. But they are at least listening and doing their small part to attract first-time home buyers back to the marketplace.