Could Toronto’s Double Land Transfer Tax Explain Why New Listings Are Down?

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New listings in the city of Toronto declined in October from the previous year, but home sales still rose and, according to a city real estate broker, not only would there be more parity, but Home prices would not rise as quickly if municipal land transfer tax were dissolved.

“The double tax on land transfers is one of the reasons not to move,” said Davelle Morrison of Bosley Real Estate Ltd. about the city of toronto and provincial levies. “If we didn’t have additional land transfer tax in Toronto, absolutely there would be a lot of Torontonians starting to move and that would open up the offer if people didn’t pay that tax, but I do recognize that the government has. got so used to this money that they won’t let go. However, this is a factor for people when deciding whether or not to sell.

Morrison might be right that city officials have no intention of giving up on municipal land transfer rights – they’ve raised more than $ 6.4 billion since its introduction in 2008. Plus, she pinged the city ​​government because she doesn’t think it’s serious to create housing in the city, citing additional levies developers pay that are passed on to consumers.

New listings in the city of Toronto fell to 5,140 last month from 7,824 in October 2020, while the average price of a home fell from $ 1,027,280 to $ 1,122,463, despite the number of sales only increasing from 300 to 3,794.

READ: Toronto Continues to Have Lowest Property Tax Rates in Ontario

“With the double land transfer tax, real estate commissions and the cost of the move, people decide not to sell their homes and just renovate instead,” Morrison said. “People think it’s cheaper to renovate than to move.

RBC Economics just released a report on home inventory declines across Canada, including 8-55% in major markets. The report also noted that sales in the 905 were particularly hot in October, and in Durham, Halton and Peel, homes sold 7-15% of demand while not going over 15%. days on the market from initial listing. Across the GTA, new listings fell almost a third last month to 11,740 from 17,806 in October last year.

But could the activity in the 905 be more frantic due to the double land transfer tax in the city of Toronto?

“Single-family homes and condominiums have become more expensive, increasing 29% and 15% year-on-year respectively. Parts of the 905 area are particularly hot, ”said the report by Robert Hogue, senior economist at RBC Economics. “Clearly, demand for suburban homes shows no signs of slowing as pandemic restrictions ease, while demand for condos rebounds steadily (condo sales are up 29% year-on-year). throughout the GTA in October). “

On a related note, Scott Ingram, real estate agent and chartered accountant in Toronto, previously told STOREYS:

“Take a $ 1.6 million house, sell it, and move into another $ 1.6 million house. Provincial and municipal transfer taxes in Toronto are around $ 57,000, and if you pay a 5% commission on your $ 1.6 million sale, that’s $ 80,000, so with attorney fees. and as a mover, you are about $ 140,000 to move. I see more and more people spending this money on improving their current homes and staying put. This contributes to the imbalance of supply and demand, putting upward pressure on prices. “

Written by
Neil sharma

Neil covered real estate for several years as a Toronto-based reporter. Prior to joining STOREYS, he was a regular contributor to the Toronto Star, Toronto Sun, National Post, Vice, Canadian Real Estate Wealth and several other publications. Do you have a real estate history? Email him at [email protected]

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