Despite the fight to the bitter end, the new land transfer tax was approved by the City of Toronto in October.
It’s important to understand how it works if you are thinking of buying or selling as it will affect everyone, especially if you were thinking of postponing any activity until the spring.
I’ve attached the details from the Toronto Real Estate Board but here is a good summary…
A second land transfer tax, on top of the provincial land transfer tax, has been approved at the following rates for residential homes:
*An easy-to-use calculator is available at http://www.nohomebuyingtax.com/
0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
2% of the amount of the purchase price above $400,000
When does it take effect?
February 1, 2008
But there are exceptions…
1. Grandfathered Transactions
If you enter into an agreement of purchase and sale by December 31, 2007, and your close date is on or after February 1, 2008 you will be charged the tax but the city will rebate you in full afterwards.
2. First Time Home Buyers
First time home buyers of new and re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000).
Here’s how we’re seeing it affect the market…
If you are thinking of selling, be prepared to move and close before February 1, 2008! If you are not able or willing to do so, you may find buyers negotating the equivalent tax from their originally intended offers. On a $500,000 home this would work out to $5,725.
If you are thinking of buying, the motivation to move faster just got stronger. Again, the hit to your bank account means thousands of dollars. And you cannot roll this tax into your mortgage as you can with CMHC insurance premiums.
Even if you buy before December 31st but close on or after February 1, 2008 you will still have to come up with the funds and wait to be refunded by the city.
For the details directly from the city, click here.
And about that U.S. economy and our soaring loonie…
The U.S. economy has been like a little black cloud following us around that occassionally has slivers of light but is bothersome nonetheless.
While I already visited this topic, I thought it was worth doing a quick update and checking in with the economists given the track record of the dollar lately.
Should we be worried as home owners, or future home buyers? Will our property values drop? Will the market crash?Here is a great snapshot from TD’s quarterly economic forecast from October….
– Canada’s economic growth to soften, but economic expansion will continue
– Canadian dollar to remain close to, or slightly above, parity over the next six months
– U.S. economic slowdown to persist through 2008, but a recession unlikely
– Comination of strong loonie and U.S. weaknesses will hamper selected Canadian industries, including: manufacturing, tourism and hospitality
– Domestic Canadian economy and Canadian real estate markets will remain solid
They go to say…
“The Canadian housing market remains strong. We do not believe that there is a bubble in Canadian real estate, as prices and sales growth have been driven by economic fundamentals, not speculation or inappropriate lending behaviour that characterized the U.S. experience.”
To see the full report, click here.
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