Exciting news for home buyers in Toronto as city mayor Rob Ford announced in an interview with CP24, that land transfer tax in Toronto would be reduced in 2012 as per the promise he made in his election campaign. Further to this, he promised the land transfer tax would be completely eliminated by 2015.[i]
The Toronto land transfer tax, which was first introduced in 2008, is applied to all property purchases in the City of Toronto, with a full or partial rebate offered to first-time home buyers.
“I can’t say we will wipe it all out this year, but we are going to do it piece by piece and you will see a portion of the land transfer tax gone by next year.” – Mayor Rob Ford
According to the Toronto Star, the land transfer tax could be reduced next year by as much as 25%.[ii] This news couldn’t have come at a better time as Toronto home prices hit a new record last month. The average house price in Toronto is now $481,305, a 2.1 per cent increase from October, even though actual home sales declined 10 per cent.
This news came as a surprise to many since last year the mayor appeared less committed to his election promise..[iii]
Plugging the current average Toronto home price into Ratehub.ca’s land transfer tax calculator, we see that the amount of land transfer tax owed is close to $3750, meaning a savings of several thousand dollars to home buyers when this tax is eliminated.
Given the savings to be had, there may be some home buyers who will hold out until at least 2012 to make a property purchase.