Erin Nicole Davis
Toronto Regional Real Estate Board (TRREB) Chairman Kevin Crigger is not in favor of a potential land transfer tax hike – and makes a strong case in support of his case.
In a presentation yesterday to Mayor Tory and the city’s executive committee, Crigger highlighted how an increase in land transfer tax would hurt housing affordability in an already fragile time and worsen supply problems.
“Given the average price of single-detached homes in Toronto was $1.5 million in 2020, the tax will primarily target homeowners who are not ‘very wealthy,'” the Toronto Real Estate Board said. @kevin_crigger told the committee,” the TRREB said in a tweet earlier today.
While there have been discussions recently about whether or not the City would impose land transfer tax on properties valued at $2 million or more, a study released by the CD Howe Institute earlier this week suggested that this could have adverse consequences for the wider economy. And Crigger agrees.
In its report, Crigger acknowledges that the TRREB understands and appreciates the fiscal challenges facing the City of Toronto. However, he was clear that increasing land transfer taxes was not the way to go.
“With this in mind, TRREB believes that the comprehensive approach taken in the Staff Report, in line with Council guidance, is more appropriate than continuing to rely disproportionately on Municipal Land Transfer Tax (TLMT),” reads -on in Crigger’s letter to the Executive Committee.
Housing affordability is arguably the most serious challenge facing Toronto, says Crigger. “City council must ensure that any revenue-generating initiative will not make this situation worse,” he wrote. “With this in mind, the TRREB strongly opposes any increase in the MLTT, including the option to target an increase in this tax on properties priced above $2 million, as outlined in the staff report.”
According to Crigger, any increase in Toronto’s already high land transfer tax could discourage “relocation buyers” from putting their homes up for sale, with many of those households choosing to renovate instead. “This means more modest homes, by Toronto standards, will not be available to those looking for more affordable options,” Crigger writes. “The Council should be wary of any policy move that could interrupt the steady progress of households in the housing market over time.”
With Toronto’s sky-high real estate prices, Crigger points out quite accurately that buyers of $2 million homes aren’t necessarily wealthy, with the average price of a home – all property types combined – in the city above $1 million. “While it may be tempting to label $2 million properties as ‘luxurious’ and the buyers of these properties as ‘wealthy’, this is not an accurate characterization of the Toronto real estate market or the Toronto home buyers.”
Additionally, Crigger questions the timing of the increase, given that we live in a climate of economic uncertainty. In the letter, Crigger states that the TRREB strongly supports the following adjustments to the MLTT: adjustments to the first-time buyer refund to ensure it provides the relief that was intended for first-time buyers; and adjustments to the house price thresholds at which MLTT rates apply to ensure that this tax is phased in.
“To add insult to injury, not only are first-time buyers not receiving the relief provided by the council, but they are being forced to pay MLTT at the highest rates, even if they buy a home at the lower price. average,” Crigger wrote. “That’s because the MLTT rate structure is such that the highest rates start on homes priced as low as $400,000, which is 59% below the 2020 average price of $986,000 in Toronto. “
Therefore, says Crigger, the city is essentially forcing people who buy below-average priced properties to pay the highest MLTT rates. “It’s just not progressive or fair,” he says.
A potential land transfer tax increase has been on the minds of politicians for some time as the City looks for ways to cool Toronto’s real estate market.
Naturally, this is not the first time that the TRREB has expressed concerns about the increase in land transfer tax. And it will surely not be the last.
Erin Nicole Davis
Erin Nicole Davis is a Toronto born and raised writer with a passion for the city, its urban affairs and its culture.
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