Real estate boards and associations across the country are lobbying hard to provide relief from land transfer taxes (LTT).
In Winnipeg, the local board says Manitoba has seen its LTT revenues increase from $31 million in 2006 to $44.8 million in 2008, a 44 per cent increase.
The board cited a November 2007 land transfer tax study by Will Dunning, the chief economist of the Canadian Association of Accredited Mortgage Professionals (CAAMP), in which he said that “the taxes levied on land transfers are far in excess of any social or governmental ‘costs’ that result from the activity of home buying and therefore these discriminatory taxes are not justifiable.”
In each of the four provinces Dunning compared – Quebec, Ontario, British Columbia and Manitoba – he showed from 1997 to the first nine months in 2007, the LTT payable had gone up more rapidly than house prices. WinnipegRealtors says that based on Manitoba’s average resale price of $168,421 in 2007 compared to $85,404 in 1997, the amount of LTT payable in Manitoba increased 358 per cent, versus the 97 per cent house price rise. Dunning said this is far in excess of any reasonable estimate of costs to operate the provincial land registry system. The percentage increases for the other three provinces were B.C at 179 per cent, Quebec at 136 per cent and Ontario at 113 per cent.
WinnipegRealtors are suggesting that Manitoba bring in a first-time home buyer exemption as B.C. and Ontario have. (Alberta and Saskatchewan do not have a land transfer or home buying tax.)
B.C.’s threshold for first-time home buyers is $425,000. It was raised from $375,000 in February 2008. Ontario has a threshold of $222,000, which means the first-time homebuyer pays $975 in LTT on a $300,000 home.
“A first-time home buyer exemption will encourage young Manitobans to stay in Manitoba,” says Don Cook, chair of WinnipegRealtors Civic and Legislative Affairs Committee. “It is hard enough already for them to come up with the necessary money to make a decent down payment and meet all of their closing costs…
“Our bottom line is the provincial land transfer tax makes home buying more costly,” says Cook. “In times when the economy is going through a slowdown the government should do anything in its power to support a key sector of the economy that creates millions in economic spin-offs and jobs.”
In B.C., a survey sponsored by the British Columbia Real Estate Association (BCREA) says that availability of affordable properties is the key barrier in a home purchasing decision. Other major financial barriers include employment security, ability to qualify for a mortgage and the provincial Property Transfer Tax (PTT). Almost one in five says the PTT is a major financial barrier to home ownership.
Fifty-seven per cent of those planning on purchasing a home were aware of the tax, but most of them can’t describe what it is or cite the tax rates.
In Toronto, where last year the city tacked a new land transfer tax on top of the existing provincial levy, the Toronto Real Estate Board (TREB) released a poll that shows 60 per cent of Torontonians believe that the city is not being run as efficiently as possible.
The poll also found that 70 per cent of Torontonians believe the Toronto Land Transfer Tax is not a fair way for the city to address its budgetary needs. This is up from 62 per cent of Torontonians who felt the same way according to an earlier Environics poll conducted for TREB in 2007, prior to the implementation of the tax.
“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the city could be taking advantage of,” says TREB president Maureen O’Neill. “Two years ago, when the city first proposed the Toronto Land Transfer Tax, the public overwhelmingly agreed with Realtors that this is an unfair tax, and, now that it has been implemented, they agree even more strongly today.”
