Toronto's new Land Transfer Tax has negative impact on City economy

On February 1, 2008, the City of Toronto imposed a Land Transfer Tax (LTT) on the sale of real estate within its municipal boundaries. This LTT requires that buyers pay a tax of about 1.1 percent on the purchase of a house in Toronto.

In the December 2008 report by C.D. Howe Institute their recent study says:
"We assess the effects of the LTT on the volume of sales and on prices using data on the sale of single-family homes in the Greater Toronto Area between January 2006 and August 2008. Our data show that the LTT caused a 16 percent decline in the number of single-family homes sold after January 2008 and a 1.5 percent reduction in house values. We calculate that in its first year, the LTT will cause a reduction in household mobility – at least 3,500 families in the municipality of Toronto will stay in houses from which they would have otherwise moved – and an average reduction in selling price of about $6,400 per house.

The reduction in household mobility means that families will be more likely to remain in houses that are too big or too small, or are too far from their workplace or school. The dollar value of this lost mobility is about $1 for every $13 of revenue that the LTT generates for Toronto’s coffers, or about $12 million per year. We also find that the LTT has led to significant new administrative expenses.". to read this report in full -visit http://www.cdhowe.org/pdf/commentary_277.pdf

Land Transfer Tax Has Impacted Economy as reported by the Toronto Real Estate Board

A separate study conducted for the Canadian Real Estate Association determined that every re-sale housing transaction pumps $33,425 of spin-off consumer spending into the economy on things like renovations, furniture, and appliances. This means that, by causing a loss of 5,000 sales, the Toronto Land Transfer Tax has cost the City’s economy about $170 million.

The analysis expects the Land Transfer Tax to continue having a negative impact on Toronto’s real estate markets, which is why it is important for everyone to fight this tax now and over the long-term. THE NEXT MUNICIPAL ELECTION WILL BE CRITICAL. TREB is getting ready and is coordinating REALTORS® that want to get involved. Let's all get invlolved.

Call or email your City of Toronto Councillor and Mayor David Miller E-mail: mayor_miller@toronto.ca and let them know how upset you are with the decision they made to increase the tax and let's get the decision reversed.