Mandatory Energy audits and the MLTT: two good reasons to buy or sell now!
Buyers and sellers should be concerned with two pending agenda items on the Provincial Government review list: the potential implementation of mandatory green energy audits and a Municipal Land Transfer Tax (MLTT). If implemented, both of these items will add significant cost and complexity for buyers and sellers, possibly even prior to spring 2016.
Ten's of thousands of lost market value or green energy upgrade costs:
One portion of the disastrous Liberal Green Energy Act 2009 was shelved but is being revisited and would call for mandatory home energy audits prior to listing a property for sale. While it is hard to disagree with the intent of the program, we feel that making the program mandatory is overkill and will cost Ontarians thousands and thousands of $$.
The cost of the audit itself would probably be fairly reasonable, between $350 and $500. The real cost is in the updates necessary to score a better energy rating and the lost market value for homes with low energy scores. Many seniors who have been in their homes for a long time could well be hit with big energy upgrade costs or a loss of their capital nest egg.
Upgrade costs would include costly windows, doors, electrical, lighting, heating/cooling systems, insulation and appliances and would run in to some major money.
Sellers would have to get all this done prior to selling and would have no choice but to pass along the costs to buyers.
Do you want to pay $5,700-$12,200-$20,200 in land transfer tax?
The MLTT has been in existence in Toronto for 7 or 8 years now and generates some $350-$400M annually in tax revenue. While city officials in Ottawa have indicated they have no interest in implementing the MLTT here, it is clear that the Provincial Government is all about finding new “revenue tools” and Ottawa has some huge projects to finance (LRT and Ottawa River clean-up to name but two). A large part of the funding for these projects is expected to come from the debt ridden treasury of the province. So the money has to come from somewhere, either higher provincial income taxes, property taxes, special taxes like the MLTT or some combination thereof.
The city could be forced in to implementing a Toronto like MLTT in order to fund committed projects without drastically raising property taxes.
The MLTT would add the equivalent of the provincial land transfer tax to every purchase and increase the cost of buying a new home significantly. The total land transfer tax burden on a future purchase would be as follows:
$300,000 purchase: $5,700 in provincial and municipal land transfer tax
$500,000 purchase: $10,475
$700,000 purchase: $20,200
So while nothing is for sure, never trust the shifting winds of politics and politically feasible methods of taxation. (especially with a debt ridden majority government!) Both of these measures could be in place by this time next year, so if you need another reason to be buying or selling this year…this might be it!