MARKET INSIGHT FOR THE WEEK ENDING SEPTEMBER 8th, 2023
The City of Toronto will implement new Municipal Land Transfer Tax rates of up to 7.5% on high-value homes as it looks to potentially increase the Vacant Home Tax to 3%.
On Wednesday, the City of Toronto approved an updated long-term financial plan, laying out a number of new housing-related revenue streams for the City as it attempts to make up its funding shortfall.
As expected, a new graduated Municipal Land Transfer Tax (MLTT) rate was established for residential properties valued at $3M and above. A 3.5% tax will be applied to homes up to $4M, a 4.5% tax on homes up to $5M, a 5.5% tax on homes up to $10M, a 6.5% tax on homes up to $20M, and, finally, homes over $20M would be hit with a 7.5% tax.
The new MLTT rates, which are payable by a purchaser when they register their new property, will come into effect on January 1, 2024.
In the financial plan, Council also directed staff to develop a multi-year approach for property tax rates and report back to Council on the possibility of increasing the Vacant Home Tax rate from 1% to 3%. The latter, if implemented, would follow in the steps of Vancouver, which raised its Empty Homes Tax to 3% in 2021.
Council also requested reports on introducing a foreign buyer land transfer tax, an emissions performance charge for buildings, and an additional land transfer tax on buyers of residential property where the purchaser owns more than one property within Toronto, with some appropriate exemptions.
In an attempt to reduce expenditures and optimize assets, City staff will look into the feasibility of reducing or removing non-residential, nonground floor area development charge exemptions, as well as complete a review of surplus or underutilized real estate assets and evaluate a possible graduated municipal property tax rate for high-value residential properties that are not a primary residence. Real estate sector breathes sigh of relief after Bank of Canada holds rate at 5%.
“The people of Toronto deserve a city where they can find affordable housing. Toronto is stepping up to meet our significant financial challenges and deliver the services people need,” Chow continued. “Despite the multiple actions approved by Council today we still need our partners – the Government of Canada and the Province of Ontario – to step up for the people of Toronto"