On January 1, the Province of Ontario doubled its land transfer tax rebate to $4,000 for first time homebuyers. Finance Minister Charles Sousa hopes the move will make life a little easier for young people trying to infiltrate a competitive and expensive real estate market. To learn more about how this tax change could affect your bid to buy or a sell a home, contact an Ontario real estate lawyer at Nanda & Associate today.
Housing prices have risen dramatically in certain regions of the province over the past several years, especially in the Greater Toronto Area (GTA), where prices leapt 21 per cent to an average of $763,000 between October 2015 and October 2016. Over that same period of time, prices in Barrie grew 24 per cent to an average of $476,000, and prices in Hamilton grew 20 per cent to an average of $535,000.
The result? As any Ontario real estate lawyer can tell you, it has become increasingly difficult for young families to invest in real estate near some of Ontario’s major jobs centres, leading Minister Sousa to announce the province’s “incentive” in November of last year.
“It’s not going to change their ability to afford the house,” Sousa said. “It is going to provide an added boost at their start.”
The increased rebate will mean that first time homeowners will not be charged land transfer tax on the first $368,000 of their purchase price.
Ontario generates more than $2-billion each year from the land transfer tax, and expects a modest half-percentage point increase for homes that sell for more than $2-million to offset losses from the doubled rebate. The increase will effect only a high-earning sliver of the population.
The rebate increase has been met with mixed reviews. Ray Ferris, president of the Ontario Real Estate Association (OREA), told City News he sees it as a positive for first-time buyers, saying it would reduce closing costs and “help them save more for their down payments.”
Benjamin Reitzes, a senior economist with BMO Capital Markets, was less optimistic, and said the larger rebate would not help potential homeowners in the GTA.
“Given the runaway home price gains in Toronto and the surrounding regions, this hardly makes a dent in worsening affordability and, if anything, just adds more fuel to the housing fire,” he told City News.
Growth in housing prices is due in part to an influx in overseas investment, but Minister Sousa has stated that Ontario will not follow British Columbia in imposing a tax on foreign nationals buying into the Vancouver market.
If you have questions regarding Ontario’s new land transfer tax rebate, or are interested in buying or selling a home, call Nanda & Associate and speak with an Ontario real estate lawyer today. We can take care of the legal side of your transaction, while you focus on finding the perfect home for your family.
