Ontario and Toronto Purposed Tax Changes and YOU
Welcome to 4/20 day and the scoop on your taxes.
If you live, work, reside, are a permanent resident or Canadian Citizen – you have very little to worry about.
If you are a non-resident buying anything from a single family home to a 6 unit apartment complex – be prepared to shell out an additional 15% in taxes above the LTT (Land Transfer Tax) already in place.
The proposed Ontario Tax changes are aiming to cool the real estate market and the speculators.
Will it provide more inventory? – NO.
Will it effect the average homebuyer or seller? – NO.
Will it affect prices? – NOT in the affordable housing market (under 1.5 million).
It might be a good first start. It might effect how quickly new condo projects sell out. (You might even get a chance to buy something with a view before they are all gobbled up).
Is this going to cause a slow down or a CRASH in the market? – NOT likely.
Pent-up demand is still here. If prices settle even a little, all those looking to buy investment properties who’ve stayed out of the speculation market, will jump back in. Basic Supply and Demand Economics will prevail.
What of the rental market? Rent controls are currently in place for rental units built prior to November 1, 1991. Rent controls are being proposed for all private rental units built after 1991. This is to help curb the massive rental hikes that have made the news of late – especially with the UrbanCorp builder insolvency.
The Province has indicated that it will be supporting rental building construction and offer rebates for some of the development charges that are incurred by the builders. This is a way to help support these projects. This plays into the hands of the developers but may not necessarily support affordability or availability over the next 5 years as these projects are constructed. As always, it is important read between the lines of any of these proposals.
The province also wants to support cities, like Toronto, in instituting a vacant property tax – to encourage homeowners with empty homes to put this supply back into the rental or purchasing market.
The last thing that the Province says it will be looking into is what they refer to as “paper flipping”. Simply said – assigning of new build properties before they are completed and avoiding all LTT taxes and HST taxes. These fees and taxes would have incurred if possession occurred and then when the property was sold. These loop holes allow for massive exchange in dollars without additional taxes being incurred by the original investor or secondary purchaser. This would help curb the speculator and the flipper investor as well.
Many changes are in the wind. Stay turned to see what actually occurs and how these changes will effect the housing markets in Ontario and Toronto over the next few months. As always, feel free to contact for more information or to discuss your real estate needs.