With escalating, if not incipient, land transfer taxes an ever-looming threat, Ontarians are telling the government they’re taxed to the hilt.
“Taxpayers are rightly saying taxes are high enough as it is and they work hard, yet give almost half or more of their money to various levels of government through their taxes,” said Tim Hudak, CEO of the Ontario Real Estate Association. “The last thing we need is a new tax when you purchase a home.”
At a recent Associations of Municipalities of Ontario conference, discussions were had to expand the LTT, prompting OREA to commission a research report that, perhaps unsurprisingly, yielded overwhelming disapproval of an expanded tax regime. Seventy-percent of respondents in the province believe government should spend money more wisely before implementing tax hikes, including an LTT.
However, one-third of Ontarians agreed that municipal governments should have greater tax powers, while a third of homeowners said their annual property taxes are at reasonable levels.
But Hudak cites a C.D. Howe Institute report from May 2018 that deplored excessive red tape and development levies, arguing they artificially raise the cost of housing. Rezoning delays and development charges add more than $70,000 onto the cost of a single-family detached home in Toronto, over $100,000 in Hamilton, and nearly $125,000 in York Region.
“Those costs are up to $100,000 in York Region before the shovel even hits the ground,” said Hudak. “Ontario realtors invited taxpayers into the conversation because they pay the bills and they overwhelmingly said no to higher and new taxes. They want municipal governments to spend more efficiently and smarter.”
Added Richard Lyall, president of the Residential Construction Council of Ontario: “The average tax on single-family low-rise product in the GTA is about $240,000 and on a condo it’s $160,000.”
The land transfer tax might be the cost of doing business, says Frances Hinojosa, a mortgage broker and managing partner at Tribe Financial, but expanding it risks rendering housing financially prohibitive for a great many.
“Any additional cost could potentially eat into a down payment on their property, which raises the overall mortgage amount and possibly even their monthly costs,” she said. “In some cases, it could impede people’s ability to move because that additional land transfer tax could stretch them too thin.”