Toronto City Council will review the City Finance Department’s budget update Thursday which includes $100 million lower-than-expected revenue from the Land Transfer Tax (LTT).
This drop in revenue has renewed calls from the Toronto Real Estate Board for the City to reduce its dependency on the LTT which it says is unfair and an inefficient government revenue tool.
Although the City is expecting a budget surplus this year, TREB is urging officials to act to make housing more affordable rather than add pressure on homebuyers’ upfront closing costs.
In a statement, the Board says that along with costs, there are other impacts of the LTT.
“The LTT reduces mobility and discourages right-sizing, thereby reducing the number of homes for sale. Predictably, a reduction in sales contributes to less LTT revenue for the city. The buyer of an average priced home in the City of Toronto now pays $13,335 upfront in MLTT, and this is in addition to a similar $13,335 in LTT to the province,” TREB says.
The Board is calling for the tax to be adjusted for inflation. It says that rising prices have meant more people paying the LTT’s higher rates rather than only those buying above-average-price homes.
It is also calling for the LTT rebate for first-time buyers to be linked to inflation to take into account the higher average home price compared to when the rates were first implemented.
TREB says that in 2008, the Toronto LTT paid by a first-time buyer purchasing an average priced home would have been zero. In 2018, a first-time buyer purchasing an average priced home would have to pay an upfront $8860 in Toronto LTT after the rebate of $4,475 is applied on top of the provincial LTT.