Ontario not targeting foreigners instead targets the rich and reward first time homebuyers
On Monday, Ontario Finance Minister, Charles Sousa announced that the Provincial government will double the Land Transfer Tax refund for eligible first-time homebuyers to $4,000. Which means, as of January 1, 2017, no first-time home buyer in the province of Ontario will have to pay Land Transfer Tax on the first $368,000 of their home. Read the full Government of Ontario Press Release here.
At the present, Ontario homebuyers are taxed 0.5% on the first $55,000, 1% on the next $55,000 to $250,000, 1.5% on the next $250,000 - $400,000, and 2% on anything above $400,000. With the changes proposed on November 14th, there will be an extra tax of 2.5% on anything above $2Million. Now these numbers reflect the rest of the province but not Toronto, as you know, due to our own Land Transfer Tax in addition to the Ontario Tax.
In an interview with the Financial Post, Phil Soper, President & CEO of Royal LePage Canada stated; “You look at even in an expensive city like (Toronto), $2 million is well above the average detached home and the additional half a point only applies to amounts above $2 million. You add another million (to a purchase over $2 million) and it only amounts to $5,000. This is a very different approach to what happened in British Columbia. It’s not aimed at one group.” This is a very true statement, as British Columbia looked for one specific group to target, namely foreign buyers, and slapped them with a 15% Tax. This does not improve affordability, and it does not encourage a healthy Real Estate Market. Ontario is trying to follow the federal mandate to make housing more affordable for the middle class; have they succeeded? I think it’s too early to tell, but it’s definitely a good step in the right direction.
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*video courtesy of The Canadian Press