By Bill Johnston

Until April 1974, Ontario didn’t have a land transfer tax. Then our (Conservative) government of the day gently introduced LTT to property buyers.



April 10, 1974:
  • 0.3 per cent up to $35,000 and 0.6 per cent on the balance
  • Average house price was $52,806
  • Average LTT was $211.84

Five years later, it got worse.

April 11, 1979:
  • 0.4 per cent up to $45,000, 0.8 per cent on the balance
  • Average house price was $70,830
  • Average LTT was $386.64

Seven years later, it got worse.

Jan. 1, 1986:
  • 0.5 per cent up to $55,000, one per cent on the next $195,000 and 1.5 per cent on the balance
  • Average house price was $138,925
  • Average LTT was $1,114.25

Three and one-half years later, it got worse.

June 1, 1989:
  • 0.5 per cent on the first $55,000, one per cent on the next $195,000, 1.5 per cent on the next $150,000 and two per cent on the balance
  • Average house price was $273,698
  • Average LTT was $2,580.47

Nineteen years later, it got far worse for Torontonians.

Spring 2008:
  • In addition to the provincial LTT, Toronto home buyers were saddled with the Municipal LTT: 0.5 per cent on the first $55,000, one per cent on the next $345,000 and two per cent on the balance
  • Average house price was $379,347
  • Average LTT was $7,683.68

Nine years later, it got worse for some Torontonians.

March 2017:
  • 2.5 per cent on the portion of purchase price over $2 million

Today, Toronto has by far the highest land transfer tax rates in Canada. Ball-parking the average home price today of $700,000, the average LTT is $20,200!

So, while average prices have gone up 1,325 per cent since 1974, LTT has gone up 9,528 per cent! That is seven times faster than house prices.

Keep in mind that home buyers get absolutely no benefit from paying the tax. It is simply a cash grab at a time when buyers typically are under the financial pressure that accompanies a move.

Remember too that buyers are paying the tax in after-income-tax dollars, as is the case with HST, and gas and liquor taxes.

Generally speaking, property taxes should be levied equally on the beneficiaries of municipal and provincial services. Land transfer tax is a windfall for the city and the provincial government with absolutely no benefit to the buyer who pays it.

9 COMMENTS

  1. Taxing so few people so heavily just doesn’t make sense to me when the property taxes in the 416 are so low relative to the surrounding regions. Having said that if they must use this tax grab why not levy it on the Sellers. They are the ones reaping, in most cases, huge tax free profits on the sale of their long ago bought homes. Perhaps a capital gains type tax should be levied against the sellers and give the buyers the opportunity to make larger down payments thus reducing debt load. It would sure help a lot of people get into the market.

  2. Can you spell C-R-E-E-P-I-N-G S-O-C-I-A-L-I-S-M?

    Each new generation of politicians leans even further to the left than their predecessors (it’s the only way to extract votes from the takers of society, being the majority often) thanks to our left-leaning education system (populated by socialists, top to bottom) which thus smugly, communally, group-thinkingly produces the latest batch of arrogant political dictatorially-minded know-it-alls. When a down-to-earth hated adversary of the group-think herders emerges on the political scene, he/she is branded as a heretical outlier brought to life from the age of the dinosaurs. But the dinosaurs were/still are the most successful forms of life ever to have occupied this place called earth. Were it not for the giant asteroid that hit the Gulf of Mexico just off of the Yucatan Peninsula, they would still be here, and we would not exist. There would be no taxation schemes.

    We have the ultimate post-asteroid-hit hemorrhoid-explosion of all time to thank for taxes.

  3. The buyer could mitigate the tax cost, write a lower offer, that is simply how you negotiate the tax. If your market is hot you can’t negotiate, if the market is cool you can.
    The real problem is why these taxes are in place, it’s because our cities and municipalities are out of control with salaries, wages, benefits, bureaucracy, and inefficiencies. There is no accountability and if these taxes were being used specifically for what they were meant, municipalities and cities would have the best infrastructure in the world. The funds are not used for this and are thrown into general revenues.

    • Yet me keep electing the same people over and over again. We really need two term limits, it would be a game changer.

  4. The fact that these Land Transfer Taxes were/are approved on behalf of EXISTING property-owners BUT TO BE PAID BY unknown FUTURE property-owners is the crux of this issue.

    — The old “Not my problem – he’s paying for it!”

    The revenues from the Toronto LTT (and it’s soon-to-be-imitated other Municipal versions) are being used to supplement spending on infrastructure and other things that were anticipate-able expenditures that were NOT Taxed for (and placed Reserved-for-Repairs/Replacements accounts) over the last 20-50 years.

    The LTT and MLTT should be a negotiable item between Buyer and Seller for inclusion on the “Statement of Adjustments” (Law says only Buyer may actually pay these taxes)

    BUT …why should the incoming Buyer pay 100% of the tax to catch-up for past non-taxed consumption/deterioration?

    Why should the Buyer’s $20,000 – $50,000 in Cash on Closing be paid to the Consolidated Revenue Fund of the City/Province instead of being leveraged 4x or 5x as Down Payment?

    Wouldn’t Sellers be better off/(no worse off) if part of the negotiation of the APS was “Who’s paying what % of the LTT?” and then building that aspect of the financial transaction into the mutually agreed purchase price?

    As it is now, if I’m the Seller unloading {tax-free} a property at 10x-20x its acquisition cost – it’s Not My Problem – AND no one is bringing up the issue. (Except one fellow who asked John Tory at TREB Mayoral event last yr)

    TREB-members, we represent Buyers & SELLERS !

    Let’s lobby for the ability to Adjust the LTT & MLLT on the Statement of Adjustments!

    • One former mayor wanted to remove the tax and was blocked by council. And then we rewarded council by electing them all again. This should be an issue at election time. We don’t seem to be united on this.

  5. Because your home is purchased with after tax dollars and your mortgage interest on your personal residence isn’t tax deductible (unlike the U.S.), the personal residence is suppose to be tax free. And now it is on the table again and they are considering raising the land transfer tax. Canadians seem to love our tax on tax, user fees for essentials, our under developed transit system and over priced parking fees and parking tickets. Now the introduction of the Canadian carbon tax so we can gift $250,000,000 to China because they need our financial help to develop their green programs and an almost equal amount to regions in South America. Lets not forget about the $12,000,0000 to Loblaws for new refrigerators. Yes it is true this is what our carbon tax is being used for. Excellent article. I hope you update and re-run it when the new increase comes in.

  6. What happens when you charge the lowest property taxes in your Province? You find other ways to get tax revenues.

    • I agree, the city operating budget should be on the shoulders of the property owners not hidden in multiple layers of tax.

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