Some new measures are being introduced to help first time buyers get into the overheated Canadian markets. First-time buyers of new and re-sale homes are eligible to receive rebates of the provincial and Toronto land transfer taxes. These rates and brackets have not changed since 1989. The Province is proposing to modernize LTT rates to reflect the current real estate market, effective January 1, 2017:
•First time buyers are now eligible for double the rebate at $4000. Currently, no LTT is payable on the first $227,500 of the value of consideration for a first home. The new rules say that no LTT would be payable by qualifying purchasers on the first $368,000 of the value of consideration for eligible homes, an increase of over $140,000 from the current level.
First-time purchasers of more expensive homes would also benefit from the enhanced refund, because the first 368,000 would come with a bigger rebate.
•The tax rate on the portion of the value of consideration above $2,000,000 for purchases of one or two single-family residences would increase from 2 per cent to 2.5 per cent. “Single-family residences” include, for example, detached and semi-detached homes, town homes and condominiums.
These changes were released because, “the government was worried about the difficulty faced by first-time buyers trying to get into the housing market, especially in the Greater Toronto Area where the average price is $762,975.”
If a house is purchased for $400,000:
Old Rules: Buyer would pay $2475 in Ontario Land Transfer Tax (LTT) and $0 in Toronto LTT, so their total =$2475.
New Rules: Buyer would pay $475 in Ontario LTT and $0 in Toronto, so their new total is now = $475.
They are saving an extra $2000.
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