Real estate buyers and sellers looking to hold onto their last dollar may be rushing to buy or sell their home before the new land transfer tax comes into effect at the end of this year.
The controversial tax, passed in a 26-19 vote by city council on Monday night, will be collected on purchases that are signed after Dec. 31.
The tax affects 0.5 per cent on the first $55,000 of residential property values, one per cent on the next $345,000 and two per cent on more than $400,000. First-time buyers do not pay on the first $400,000.
Buyers trying to avoid paying for the new levy would need to sign on the dotted line before the new year and sellers hoping to make their asking price more attractive for potential investors, may be placing their homes on the block sooner rather than later.
“Anytime there’s a market destabilizing force like the implementation of a new tax, you do tend to see correlative changes in consumer behaviour,” said Kevin Gaudet of the Canadian Taxpayers Federation. “People thinking to buy a house next year because they wanted to save a few extra bucks (for a larger down payment) may facilitate the decision in moving forward (sooner) … these types of taxes have an impact.”
Von Palmer of the Toronto Real Estate Board said the tax will have an economic impact of up to $33,000 per purchase to other industries such as furniture, which thrive on home sales. He also added that buyers will be forced to place smaller down payments or carry larger mortgage payments over time.
He said it still remains to be seen whether or not the impending tax will result in an upward or downward spike in housing sales.
Want to know more? Call Alexandre Malkhassiants at (416) 723-9383 or go here -