Everybody knows about the changes to Land Transfer Tax in Toronto, especially buyers. Recently there have been changes made to the Toronto Land Transfer Tax which make a purchaser pay double what people pay anywhere else in the province. Naturally paying twice the Land Transfer Tax is getting many people angry, but I am going to put a twist on things which may make you change your mind a little bit. I will shed a little light on the issue from a completely non biased approach. How can a realtor do that? well, because I think the tax is justified….. I just don’t think it should be the purchaser paying.
If you own a home in Toronto I want you to think about what your home could sell for if you put a sign in the lawn today. At the same time I would like you to hold up a copy of your land taxes and see what the city assesses your property at. I can with almost 100% certainty guarantee you property can sell for much more than what it is assessed at. In most cases that number is in excess of $100,000 and in many areas well over $250,000. Just to give you an idea, if you were paying annual property taxes at your homes true present value, you would be paying much more annually to keep this property.
I cannot say with certainty but I think the City of Toronto is well aware of this and may be the reason behind why they have imposed a double Land Transfer Tax. They have been losing hundreds of millions of dollars a year annually on the under valuation of properties and sellers are making tonnes of money tax free. To play devils advocate, as shady as it is to charge a double Land Transfer Tax people are also living in a property which is under taxed on an annual basis. So what is the solution?
If the city does keep the double Land Transfer Tax in place I think the seller should be responsible for paying. They have been living in an under valued property and are the ones making hundreds of thousands in profit and the buyers are taking on high mortgages with no guarantee these homes will be continuously going up in value. It would create a bump in the sales activity and allow some more buyers to enter the market, which is obviously great for the real estate market as a whole.
If properties were actually assessed at what they are worth I think the economy would be far better off. I am not going to get into the GDP growth and I am sure economists would disagree, but I am a rogue realtor and somebody who actually cares about the debt crisis which people are encountering. If you want to buy a million dollar home you should be taxed on a million dollar home and pay your fair share. This would be a much better way of taxing people without having to raise income taxes, which many people take issue with.
Properly taxing properties would likely create a downward pressure on pricing because carrying costs would rise meaning less people would qualify for mortgages at the current levels and inevitably result in sellers getting less money for their home than if they paid half of the Land Transfer Tax. Sounds to me like people need to be careful what the wish for because the double Land Transfer Tax is peanuts compared to what a full overhaul would do.
I can go on for days about how I think the current taxation system needs to be altered to protect all of us, but I will leave that for a personal conversation between me and you if you want to send me a personal e-mail:) Have a great week!