Tax Freeze on Multi unit Residential Buildings proposed
The following is reproduced with the kind permission of Federation of Ontario Law Associations:
Finance Minister Charles Sousa announced a few changes to the Land Transfer Tax regime in Ontario and as real estate practitioners in Ontario, you and your colleagues should know.
In summary, the changes are:
1. Double the maximum Land Transfer Tax (LTT) refund to $4,000 for eligible first-time homebuyers, as of January 1, 2017.
- With the increased maximum, no LTT would be payable by qualifying purchasers on the first $368,000 of the cost of a first home.
- With the doubled refund, more than half of first-time homebuyers in Ontario would pay no LTT on the purchase of their first home.
2. As of January 1, 2017, the government is proposing to increase LTT rates on the portion of the value of consideration:
- Above $2 million, for transfers of one or two single-family residences, such as detached and semi-detached homes, townhomes and condominiums, to 2.5 per cent from two per cent.
- Above $400,000, for all other types of property, such as commercial, industrial, multi-residential and agricultural properties, to two per cent from 1.5 per cent.
3. Additional information regarding purchasers will be required to be submitted, including the intended use of the property (principal residence or rental) and residency/citizenship status.
In addition there will be a freeze on property taxes on apartment buildings while the government reviews how the high property tax burden on these buildings affects rental market affordability. The average municipal property tax burden on apartment buildings is more than double that for other residential properties such as condominiums.