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Toronto home buyer tax starts today

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Buyers in Toronto's high-priced real estate market will be digging even deeper today as the city's newest tax goes into effect.  "Obviously the day has come. It's still a back-breaking tax," said Von Palmer, spokesperson for the Toronto Real Estate Board, which led a bitter fight last year to block the municipal land transfer tax. "We hope it does not affect the market in a negative way."

Sales increased after the tax was approved last October, Palmer said. In the first two weeks of January, Toronto sales were up 21 per cent over the same period in 2007, while in the 905 area – where the tax does not exist – sales were up by only 5 per cent.

"We're not suggesting it's because of the land transfer tax. That would be speculation," he said. "However, human nature being the way it is, some are wondering how to avoid the land transfer tax."

The tax, on both residential and commercial properties, is in addition to the existing provincial tax.

Purchasers are exempt from the Toronto tax if they signed a deal to buy before December 31, even if the deal closes after today. Also, first-time home buyers receive a rebate on purchases up to $400,000.

Frequently asked questions

How will I pay the land transfer tax?

It will be paid as part of the up front closing costs along with the provincial land transfer tax.

What rebates are available?

Rebates will be given to purchasers who signed sales agreements before Dec. 31, 2007, or are first-time home buyers.

How does the rebate for first-time home buyers work?

If you are buying a residential property with up to two single-family residences, you are eligible for a rebate of up to $3,725. If your house price exceeds $400,000, you pay 2 per cent on the remaining portion.

How will I get the rebate?

If it's a full rebate, you will receive it when your lawyer registers your property transaction. You will not be required to pay the tax then. But if the price of your home exceeds $400,000, you are eligible for a rebate of only the tax paid on the first $400,000, and the full tax will be collected when your lawyer registers your property transaction. Once your lawyer submits your rebate application, a rebate cheque will be sent to you.

If I signed my deal to buy a house in January but it has not closed yet will I pay the new tax?

Yes, unless you are a first-time home buyer.

February 1, 2008 in Toronto Real Estate Taxes | Permalink

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Comments

I think first time home buyer should pay annual tax, isn't it?

Posted by: realtors in toronto | Jun 16, 2008 1:03:58 PM

Hi, is there any tax rebate for first-time home buyers, when we have lived in Toronto for six months? Is there any Toronto realtor that can give us some advices? Thanks.

Posted by: Toronto realtor | Feb 19, 2008 4:29:21 AM

I remember the heated conversations on the Toronto LTT back in October. Yes, the day has finally come. I also remember the Toronto Real Estate Board leading our fight to block the land transfer tax. "We hope it does not affect the market in a negative way," said Mr. Von Palmer. Well, I think the initial fear is going to slowly disappear, and we'll see that not even an extra tax durden could slow down the heated property market here in Toronto. So I hope.

Posted by: Toronto realtor | Feb 5, 2008 11:17:14 AM

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