A Land Transfer Tax is paid on the purchase of a home in Ontario. Purchase the home in Toronto and there is an additional Toronto Land Transfer Tax. For a $500,000 condo, the Toronto portion of this tax can add up to $5,725 to the cost.
Some would like to abolish the Toronto Land Transfer Tax. One argument for eliminating this tax is that it would make home ownership more affordable by reducing the total purchase price. This is the position presented by the Toronto Real Estate Board at a February 2015 meeting with Toronto’s Budget Committee.
A review of 2013 property taxes in Toronto and surrounding areas – right panel on this page – is less clear about the benefit of eliminating this tax.
Annual property taxes are lower in Toronto than surrounding areas. Should the Toronto Land Transfer Tax be eliminated, Toronto residents could find annual property taxes substantially increased to compensate for lost income to the City.
In 2013 the Toronto Land Transfer Tax brought in about $357 million.
Eliminating the Toronto Land Transfer Tax could require that property taxes be increased to pay for services and infrastructure supported by City revenues. Those who paid the Land Transfer Tax would then lose the ongoing benefit of reduced property taxes thus making it more costly for existing homeowners.