TORONTO – As home prices continue to escalate across Greater Toronto and beyond, aspiring home buyers may find some relief in a newly-proposed increase to the province’s Land Transfer Tax (LTT) refund.
The proposed legislation would see the maximum refund – which is currently available only to eligible first-time buyers in Ontario – double from $2,000 to $4,000, effective January 1, 2017. For eligible purchasers, that would eliminate the need to pay provincial LTT on the first $368,000 of a property transaction.
The refund increase was one of several proposals unveiled on November 14 by Finance Minister Charles Sousa, as part of the 2016 Ontario Economic Outlook and Fiscal Review.
“Purchasing your very first home is one of the most exciting decisions in a young person’s life, but many are worried about how they will be able to afford their first condo or house,” Sousa explained in his address to Queen’s Park.
“For many, this will mean no Land Transfer Tax on the purchase of their first home.”
Additional LTT modernizations
Within his statement, Sousa also announced that the Ministry of Finance “will also be modernizing the Land Transfer Tax system for the first time in a generation,” by updating the LTT rates that have been in place since 1989.
Chapter 5B of the Review outlines two proposed rate updates, both of which would also take effect on January 1, 2017:
- The tax rate on the portion of the value of consideration above $2,000,000 for purchases of one or two single-family residences (e.g. condominium, detached home, townhouse, etc.) would increase from 2 per cent to 2.5 per cent.
- The tax rate on the portion of the value of consideration above $400,000 for purchasers of all other types of property (e.g. commercial, industrial, multi-residential, or agricultural) would increase from 1.5 per cent to 2 per cent.
LTT Rebate Eligibility
According to a second release issued November 15 by the Ministry of Finance, “Eligibility for the Land Transfer Tax refund for first-time homebuyers is proposed to be restricted to Canadian citizens and permanent residents. First-time homebuyers who become Canadian citizens or permanent residents within 18 months of purchasing a home could also apply for the refund.”