The Toronto Regional Real Estate Board (TRREB) has launched its latest offensive against the City of Toronto’s plan to raise the Municipal Land Transfer Tax (MLTT) in Canada’s largest city.
Ipsos Public Affairs conducted a poll for the real estate board that found the majority of respondents opposed an increase to the existing levy. Fifty-four percent of the 801 Toronto residents surveyed would not like to see the MLTT rise on properties over $2 million, while 64% believe it would further constrict housing supply across all price segments.
“Any MLTT increase has a ripple effect on all market segments, and would further constrain inventory, making it an even more challenging environment for buyers. Recent polling by Ipsos shows a majority of residents understand this risk and more than half oppose a potential increase to the land transfer tax. Housing affordability is one of Toronto’s most serious challenges and City Council should be doing everything it can to make it more affordable, not less,” TRREB CEO John DiMichele said in a statement.
TRREB’s latest sales data showed that the benchmark price of a Toronto was $1,051,807 last month, however, the average sales price of a detached home in the city was $1,699,881, indicating that it might not be long before that segment of the market breaks $2 million.
“Considering Toronto has a double land transfer tax, it’s more expensive for people to purchase anyway, so an increase to anything over $2 million is not good at all,” said Shawn Gandhi, a broker with RE/MAX Real Estate Centre. “It will negatively affect sales and I think it will create an influx of people moving to the suburbs based on the fact that they may save a substantial amount on closing costs. It will soften sales in the detached segment of the market.”
Vacant home tax exemption on principal residences
The real estate board credited the City Council for obliging its recommendation to exclude principal residences from its vacant home tax, which was first introduced in Vancouver—the city collected $33 million in 2017, $23.3 million in 2018, and $27.9 million a year later.
“We appreciated the opportunity for input, and we are encouraged that the recommended tax design is consistent with TRREB’s views, especially the need for various exemptions. TRREB is generally supportive of the list of exemptions included in the staff recommendations, and we look forward to providing further input as staff continue with the next step of public consultations,” said DiMichele.