Ontario will refund first-time home buyers up to $4,000 from the land-transfer tax. The announcement was made in the November fall economic statement. “Purchasing your very first home is one of the most exciting decisions in a young person’s life,” Finance Minister Charles Sousa told the legislature. “But many are worried about how they will be able to afford their first condo or house.”
The up-to-$4,000 refund will effectively remove the land-transfer tax from the first $368,000 of a home price for anyone buying their first home. First-time home buyers are currently eligible for an up-to-$2,000 refund.
The average price of a home in Toronto and area in October was $762,975, according to the Toronto Real Estate Board. Prices ranged from an average of $429,407 for a condominium to more than $1-million for a detached house.
Mr. Sousa opted for a much milder measure than British Columbia, which imposed a 15-per-cent tax on foreign buyers this summer to cool home prices in Metro Vancouver. Ontario will restrict the refund to Canadian citizens and permanent residents, but Mr. Sousa suggested he did not want to go any further on curbing foreign ownership for fear of discouraging overseas investment.
“We’re trying to tell the rest of the world that Ontario’s open, that we want to attract more investment,” he told reporters after the speech.
The government will pay for the measure by jacking up the land-transfer tax on other buyers. Any portion of a home price over $2-million will be subject to a tax rate of 2.5 per cent, up from 2 per cent; the rate on a portion of the purchase price of non-home properties – such as commercial buildings – over $400,000 will rise from 1.5 per cent to 2 per cent.
The province’s real estate lobby, however, heaved a sigh of relief. Realtors had urged the government to cut the land-transfer tax instead of taking steps to cool the market, which could have eaten into their business.
Tim Hudak, incoming CEO of the Ontario Real Estate Association, said cutting the tax would help ease the upfront cost of buying a house.
“For millennials, which they call Generation Screwed, it’s increasingly difficult to get that Canadian dream of home ownership,” he said. “I’m very pleased that Premier Kathleen Wynne and Finance Minister Sousa are listening.”