Finance Minister Charles Sousa is giving first-time home buyers a land transfer tax rebate of up to $4,000.
Sousa used Monday’s fall economic statement to announce the tax break for eligible purchasers is being doubled from $2,000.
The treasurer said the measure — funded by hiking rates on houses selling for more than $2 million — will have more impact outside the Greater Toronto Area’s overheated housing market, but stressed “every little bit counts.”
“It’s not going to change their capacity to pay; it’s not going to change their ability to afford the home; it is going to provide an added boost,” he told reporters.
Asked if the city of Toronto — the only municipality that is allowed to charge a separate land transfer tax — should follow the province’s lead, Sousa said that’s up to council.
The change takes effect on Jan. 1 — 18 months before the 2018 election.
It means first-time buyers who are permanent Ontario residents, will not pay land transfer tax on the first $368,000 of the cost of their homes. Given lower prices in much of the province, Sousa said “for many this will mean no land transfer tax on the purchase for their first home.”
Tenants are also getting a benefit, as the government freezes the property tax on apartment buildings — which are taxed at more than double the rate of other residential properties and condos, for example — while it reviews how the “high property tax burden” impacts the affordability of rentals.
To fund the breaks, the government will increase land transfer rates on houses that cost more than $2 million. For every dollar over and above that, the rate will rise from 2 per cent to 2.5 per cent.
But the tax on the portion of the purchase price between $400,000 and $2 million will remain at 2 per cent.
The rate between $250,000 and $400,000 stay at 1.5 per cent, and between $55,000 and $250,000 at 1 per cent.
And the rate for the first $55,000 of a purchase price will remain at 0.5 per cent.
The changes only affect properties with one or two single-family residences.
For other types of properties, such as apartment buildings, the only increase will be on the portion over and above $400,000, which will jump from 1.5 per cent to 2 per cent.
The Ontario Real Estate Association’s incoming CEO, Tim Hudak, praised the change, saying “every break is going to help out that young family” and urging Toronto to follow suit.
“If the city matched this provincial reduction, you’re looking at over $8,000 in tax relief,” said Hudak.
Joe Vaccaro, CEO of the Ontario Home Builders’ Association, said it would be especially “helpful” outside the GTA.
“New home buyers are struggling to get into the market, even outside Toronto. We’re seeing that struggle in places like the Waterloo region and in places like Niagara,” said Vaccaro.
Toronto-area realtors say the change won’t make much difference to first-time house buyers in the city, where the average selling price was $762,975 last month.
“I don’t think it’s going to push anyone up the (property) ladder,” said Chris Cansick of Bosley Real Estate.
The Liberals’ gambit comes as opposition MPPs accuse them of not doing enough for ordinary Ontarians and with the party languishing in the polls.
“They attempt to use distractions, but . . . Ontario remains in a dire fiscal state and life remains unaffordable under this Liberal government,” said Progressive Conservative MPP Vic Fedeli (Nipissing).
New Democrat MPP Catherine Fife (Kitchener-Waterloo) said the Liberals are “desperately” trying to make it seem as if they are responsive.
Despite a controversial accounting change from auditor general Bonnie Lysyk, Sousa said the Liberals would balance the books in 2017-18 as he has promised.
The deficit for 2016-17 will remain at $4.3 billion, as he had projected in the February budget.
That figure would have been lower if Lysyk hadn’t surprised the Liberals last month by announcing that two government-sponsored public pension funds should no longer be booked as assets — even though they had been since 2001.
The actuarial adjustment — which is now being reviewed by an independent expert panel — wiped $10.7 billion from the assets column and is the equivalent of a $2.2-billion hit on this year’s budget, rising to $2.8 billion in 2017-18, and a staggering $3.7 billion the year after.
That means if the panel convinces Lysyk to change her view, the government’s fiscal situation will be greatly improved heading into the June 2018 election.
Even if there is no rethink from the auditor general, the Liberals say higher than expected economic growth and rising corporate and personal income tax revenues should keep things in the black going forward.
Content courtesy www.thestar.com