Toronto city council voted to adopt a new land transfer tax on properties selling for 3 million dollars and higher at a special session on Wednesday, September 6.
The new tax is set to start being taken starting January 1, 2024.
The new tax adds a further disincentive to luxury buyers who were already paying double the land transfer tax levied on transactions outside of Toronto.
With average property values for detached homes exceeding $2.5 million in Central Toronto, there were already substantial differences in neighbouring areas. Pickering, for example, had detached homes averaging just over $1.2 million in August. Average prices are even lower as you head further east.
Let’s look at the implications for buyers looking in the new ranges (existing shaded in gray):
For properties selling at 3,500,000, the current LTT payable outside Toronto is 66,475. In Toronto, it is currently 73,975 (plus the provincial 66,475). With the increase that will jump to 78,975 (+66,475).
It gets progressively more costly at higher price points. At 4,500,000, the Toronto LTT adds 118,975 in costs to the buyer. At 7.5 million it adds 278,975, and at 25 million a whopping 1,441,475 in extra LTT versus elsewhere in Ontario.
To look at the new tax, view my Land Transfer Tax Calculator.
Of course, you could argue that those who can afford properties at these price points can afford the extra tax. On the other hand, you can look at the combination of value and total costs of purchasing, which start to become very impactful as the selling price climbs.
For someone who doesn’t end up keeping a property for a long period, the implications of those extra land transfer taxes are very pronounced.