REALTORS® Tell City Council that Proposed 2014 Budget Reliance on Land Transfer Tax Poses Risks and Call for Relief for Home Buyers
Posted by: Toronto Real Estate Admin / Category: Toronto Realtor
REALTORS Tell City Council that Proposed 2014 Budget Reliance on Land Transfer Tax Poses Risks and Call for Relief for Home Buyers
TORONTO, January 28, 2014 — With Toronto City Council meeting tomorrow to give final approval to
the City’s 2014 Budget, the Toronto Real Estate Board (TREB) is telling
Councillors that the proposed budget’s reliance on the Toronto Land Transfer
Tax poses risks and that City Council should begin cutting this tax instead.
TREB’s views are being echoed by thousands of Torontonians who have been
contacting City Councillors by email and other means.
“Relying on an unpredictable revenue source like the Land
Transfer Tax, which fluctuates with the City’s real estate market, poses risks. The proposed budget that City Council will be
debating relies on this unpredictable revenue more than ever before. Torontonians deserve better than that and
City Council should be focusing on predictable budgeting options and cutting
the Land Transfer Tax, instead,” said Dianne Usher, President, Toronto Real Estate Board.
When the City’s 2014 budget process began last November,
City staff recommended budgeting $335 million in revenue from the Land Transfer
Tax for 2014, which allowed for a buffer in revenue expectations to account for
potential fluctuations in the real estate market. Since then, the City’s Budget Committee and
Executive Committee made amendments to the proposed Budget to increase the
budgeted revenue from the Land Transfer Tax by over $20 million, exposing the
City’s budget to greater risk if real estate market trends change. In a letter
sent to City Council, TREB has warned City Councillors of this risk, and called
for City Council to cut the Land Transfer Tax instead, and focus on predictable
budgeting options.
“The Home Buying Tax
hurts people when they can least afford it. It penalizes people like growing
families or retirees. City Council should do its part in keeping Toronto
affordable by providing relief from the Home Buying Tax for all home buyers,”
said Dianne Usher, President, Toronto Real Estate
Board.
TREB has told Councillors that eliminating the Land Transfer
Tax on the first $400,000 value of a property, at a minimum, for all home
buyers, would be a good first step in providing relief from this tax. Setting this threshold at $400,000 would
ensure that first-time home buyers would be no worse off (Currently, first-time
home buyers are eligible for a rebate on the Land Transfer Tax payable up to a
$400,000 property). TREB also told
Councillors that if a lower threshold is preferred, then the current rebate for
first-time home buyers should be maintained, and potentially expanded, and
indexed to inflation going forward. With the current average price in Toronto at approximately $570,000,
TREB believes that the current first-time home buyer rebate is inadequate
because it has not kept pace with inflation.
“Even first-time home buyers purchasing below average–priced
properties are currently being forced to pay thousands of dollars in Toronto
Home Buying Tax, because the City’s first-time home buyer rebate has not kept
pace with inflation,” said Von Palmer, TREB’s Chief Government and Public
Affairs Officer.
TREB has also pointed out to City Council that the current
Land Transfer Tax rates are regressive because they force people purchasing
below-average priced homes to pay the highest tax rate. Currently, the highest Land Transfer Tax rate
kicks in on homes priced over $400,000 for ALL home buyers, considerably lower
than the City’s current average price of approximately $570,000 and rising.
“The Home Buying Tax has become more and more regressive as
home prices have increased, because its tax rates have not been adjusted with
inflation. Someone purchasing a home
priced below the City’s average price is being charged the highest tax rate.
That’s not right,” said Palmer.
TREB also told City Council that potential new real estate
transactions resulting from a reduction in the Land Transfer Tax could help
off-set any impact to the City’s budget.
“Potential growth in home sales resulting from a Land
Transfer Tax rate reduction could help offset the impact to the City’s budget.
Research by the C.D. Howe Institute has shown that the Land Transfer Tax has
dampened home sales in Toronto by 16 percent annually. If a Land Transfer Tax rate reduction helps
to reduce or reverse this effect, the resulting extra home sales, which may not
have occurred otherwise, could generate new off-setting revenue for the City,
while bringing more balance into the market,” said Usher.
TREB is encouraging the public to visit www.LetsGetThisRightToronto.ca to tell City Council to do the right thing and phase out the Home Buying
Tax. Thousands of Torontonians have
already done so.
Media Inquiries:
Mary Gallagher,
Senior Manager Public Affairs
(416) 443-8158
maryg@trebnet.com
For information about Buyer Representation Agreements
(BRA) visit www.BRAFirst.ca
For Media/Public Inquiries: Mary Gallagher, Senior
Manager Media Relations.
Toronto
Real Estate Board 1400 Don Mills Road Toronto, ON M3B 3N1, Office: (416)
443-8158, Email:maryg@trebnet.com
Greater Toronto REALTORS are passionate about their work.
They adhere to a strict Code of Ethics and share a state-of-the-art Multiple
Listing Service. Serving over 37,000 Members in the Greater Toronto Area,
the Toronto Real Estate Board is Canadas largest real estate board. Greater
Toronto Area open house listings are available on www.TorontoRealEstateBoard.com
Article source: http://www.torontorealestateboard.com/market_news/release_market_updates/news2014/nr_ltt_budget_012814.htm
Tags: Toronto Realtor