When British Columbia imposed a 15 percent tax on foreign buyers in August, Ontario’s Finance Minister Charles Sousa promised future measures to address affordable housing in our province as well. Well the long-awaited plan, touted as an “incentive” for potential home buyers, has finally been unveiled.
Starting January 1st, 2017, the land transfer tax rebate is going to be doubled to $4,000.
Premier Kathleen Wynne advised us not to expect a radical shift in the way the housing market works in Ontario and downplayed it as “a small change” for first-time homeowners. She was not wrong.
Market experts agree $4,000 is just too little to have any type of actual effect on a homeowner’s purchasing decisions. “It’s not a game-changer – it’s just pocket money. It’s not going to change the decision to buy or not to buy or what to buy,” according to Benjamin Tal, CIBC World Markets deputy chief economist.
For buyers in the Greater Toronto Area especially, this rebate is going to make a minimal difference.
The Toronto Real Estate Board reports that the price of a detached home hit $1.3 million in October, having jumped 21 percent year over year. The average price of a home was $763,000 and condos averaged $430,000.
The Toronto real estate market has the unique distinction of being the only municipality where homeowners must pay both a municipal and provincial land transfer tax. With that in mind, this plan does very little to address housing affordability in Toronto. Of course, for anyone outside of Toronto, it’s an added boost helping reduce closing costs and allow the ability to save more for down payments.
The increase in land tax transfer rebates for first-time homeowners amounts to a token gesture for buyer’s in Toronto’s hot housing market. Perhaps the Ontario government should also take into consideration the enormous difference in real estate prices throughout the province and do more to help buyers in Toronto achieve their dream of home ownership.