Ontario is doubling the rebate on its land transfer tax for first-time homebuyers to $4,000 in an effort to help them enter the housing market, but it is also raising the same tax on homes that sell for over $2 million.
Finance Minister Charles Sousa said first-time homebuyers won’t pay any land transfer tax on the first $368,000 of a purchase price after the changes take effect Jan. 1. He called the $4,000 rebates an “incentive” for would-be homeowners.
Currently first time homebuyers do not pay any land transfer tax on the first $227,350 of a purchase price, a $2000 rebate.
“It’s not going to change their ability to afford the house,” he said. “It is going to provide an added boost at their start.”
Sousa again said Ontario would not follow the lead of British Columbia, which in August imposed a 15 per cent tax on foreign nationals buying real estate in the Vancouver area. But he said the provincial government will block non-Canadian citizens from accessing the increased rebates for the land transfer tax.
There will also be a half-percentage point increase in Ontario’s land transfer tax on homes that fetch more than $2 million, a measure expected to affect less than one per cent of the population, added Sousa.
The province takes in over $2.1 billion a year in the land transfer tax. Any additional revenue generated by the increase in the levy on luxury homes will help pay for the doubled rebates for first-time buyers.
Note the City of Toronto also has a land transfer tax. First time homebuyers in the City of Toronto are currently exempt on the first $400,000 of a purchase price.
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