Ottawa real estate: Could a Toronto like Municipal Land Transfer Tax (MLTT) be coming to Ottawa?

Published 19 May 14 09:16 AM | Gord McCormick 

Taxing Housing questions for your Municipal and Provincial Candidates:

  

The City of Toronto has had a Municipal Land Transfer Tax in place since Feb 1, 2008.  This tax basically mirrors the Provincial Land Transfer Tax (LTT) and doubles the amount of tax buyers would be forced to pay as a closing cost on the purchase of a new or resale home/property.

In our current slowing real estate market, the last thing we need is another tax adding cost to the process.  To put this potential new tax in perspective, a buyer of a $500,000 property would have to pay $6,475 Provincial Land Transfer Tax and another $6,475 for the Municipal Land Transfer Tax, for a total of $12,950.

Also, because the LTT is graduated, higher priced properties pay a higher %.  A $630,000 purchase would cost $18,150 just for these two taxes!

 

What is tricky about this MLTT tax is that it is levied and collected by the Province but large transfers are made back to the originating municipality who “requested” this taxation.  The amount of MLTT being collected in only the 416 area of Toronto is reported to be in the area of $375M annually.  While our Ottawa council and bureaucrats have been quiet on this subject, it only stands to reason that if it is deemed to have worked in Toronto it would probably be implemented here.  There are differing opinions on how well it has “worked” in Toronto.

We see numerous problems with the potential for an MLTT in Ottawa:

1) Impact on the housing market which is an important part of our local economy

2) Housing is a cyclical market with ups and downs and is therefore not a predictable revenue source. In the early 1990’s housing transactions in Ottawa dropped off by 32% and it took almost a full decade to get back to the same level.

3) The taxation revenue accrued by the Province for this local tax is then doled out based on Provincial priorities.  With Toronto and the GTA dominating the Provincial scene, can we be comfortable that our local tax monies do not end up subsidizing transit and infrastructure projects closer to Queen’s Park?

The Ontario Real Estate Association has put together an easy process for getting word to your MPP:  http://www.donttaxmydream.ca/helpstop.html

 

You may also have already seen that the City Planning Committee voted recently to hike development charges on new construction by 22%-30% on their 5 year review cycle.  This will mean an additional $5,000-$8,000 per new construction home on top of the existing charges.  This motion is due to be voted on by the full Ottawa Council in June.

http://www.ottawacitizen.com/business/Ottawa+planning+committee+development+services+bylaw+increased+fees/9835717/story.html

 

As a REALTOR® I am seriously concerned with the impact of both these taxation programs.  If you are concerned also, please call or email both your MPP (candidates) and your Ottawa City Councillor (candidates) and tell them so.

 

Gord McCormick

Broker of Record

Oasis Realty Brokerage

613-435-4692

www.oasisrealtyottawa.com

oasisrealty@rogers.com

 

 

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