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President's Toronto SUN Column

TREB President's Column as it appears every Friday in the Toronto Sun's Resale Homes and Condos section.

Land Transfer Tax Exposes Budget To Risk

January 31, 2014 -- With Toronto City Council debating the City’s 2014 Budget, the Toronto Real Estate Board (TREB) is telling Councillors that the proposed budget’s reliance on the Toronto Land Transfer Tax poses risks and that City Council should begin cutting this tax instead. TREB’s views are being echoed by thousands of Torontonians who have been contacting City Councillors by email and other means. 

Relying on an unpredictable revenue source like the Land Transfer Tax, which fluctuates with the City’s real estate market, poses risks.  The proposed budget that City Council will be debating relies on this unpredictable revenue more than ever before.  Torontonians deserve better than that and City Council should be focusing on predictable budgeting options and cutting the Land Transfer Tax, instead.

When the City’s 2014 budget process began last November, City staff recommended budgeting $335 million in revenue from the Land Transfer Tax for 2014, which allowed for a buffer in revenue expectations to account for potential fluctuations in the real estate market.  Since then, the City’s Budget Committee and Executive Committee made amendments to the proposed Budget to increase the budgeted revenue from the Land Transfer Tax by over $20 million, exposing the City’s budget to greater risk if real estate market trends change. In a letter sent to City Council, TREB has warned City Councillors of this risk, and called for City Council to cut the Land Transfer Tax instead, and focus on predictable budgeting options.

 The Home Buying Tax hurts people when they can least afford it. It penalizes people like growing families or retirees. City Council should do its part in keeping Toronto affordable by providing relief from the Home Buying Tax for all home buyers.

TREB has told Councillors that eliminating the Land Transfer Tax on the first $400,000 value of a property, at a minimum, for all home buyers, would be a good first step in providing relief from this tax.  Setting this threshold at $400,000 would ensure that first-time home buyers would be no worse off (Currently, first-time home buyers are eligible for a rebate on the Land Transfer Tax payable up to a $400,000 property).  TREB also told Councillors that if a lower threshold is preferred, then the current rebate for first-time home buyers should be maintained, and potentially expanded, and indexed to inflation going forward.   With the current average price in Toronto at approximately $570,000, TREB believes that the current first-time home buyer rebate is inadequate because it has not kept pace with inflation.

I asked Von Palmer, TREB’s Chief Government and Public Affairs Officer to share his thoughts on the issue.

“Even first-time home buyers purchasing below average–priced properties are currently being forced to pay thousands of dollars in Toronto Home Buying Tax, because the City’s first-time home buyer rebate has not kept pace with inflation,” said Mr. Palmer.

TREB has also pointed out to City Council that the current Land Transfer Tax rates are regressive because they force people purchasing below-average priced homes to pay the highest tax rate.  Currently, the highest Land Transfer Tax rate kicks in on homes priced over $400,000 for ALL home buyers, considerably lower than the City’s current average price of approximately $570,000 and rising.

“The Home Buying Tax has become more and more regressive as home prices have increased, because its tax rates have not been adjusted with inflation.  Someone purchasing a home priced below the City’s average price is being charged the highest tax rate. That’s not right,” said Palmer.
                                                                                                                                   
TREB also told City Council that potential new real estate transactions resulting from a reduction in the Land Transfer Tax could help off-set any impact to the City’s budget.

Potential growth in home sales resulting from a Land Transfer Tax rate reduction could help offset the impact to the City’s budget. Research by the C.D. Howe Institute has shown that the Land Transfer Tax has dampened home sales in Toronto by 16 percent annually.  If a Land Transfer Tax rate reduction helps to reduce or reverse this effect, the resulting extra home sales, which may not have occurred otherwise, could generate new off-setting revenue for the City, while bringing more balance into the market.

We are encouraging the public to visit www.LetsGetThisRightToronto.ca to tell City Council to do the right thing and phase out the Home Buying Tax.  Thousands of Torontonians have already done so.

Dianne Usher is President of the Toronto Real Estate Board, a professional association that represents 37,000 REALTORS® in the Greater Toronto Area.

Follow TREB on www.twitter.com/TREBhome, www.Facebook.com/TorontoRealEstateBoard and www.youtube.com/TREBChannel

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Archive

 2013
November 1 Staging A Home Is A Good Investment To Make
October 18 Helping Communities To Build Better Lives
September 27 Working Together Towards a Better Toronto
August 23 A REALTOR® Will Represent Your Best Interests
August 16 Finding A Vacation Property Is Easier Than You Think
August 2 Simplifying The Homebuying Process
July 19 Cottages Are Investments In Memories
July 5 New Beginnings At The Toronto Real Estate Board
June 21 Awards program will recognize Toronto’s best buildings
May 31 Inspired By The Volunteer Efforts Of REALTORS®
May 10 REALTORS® QUEST To Be The Best
April 26 Prep Is Key For Selling Success
April 12 Long-Term Outlook For Real Estate Remains Positive
March 22 Real Estate Profession Has Much To Offer
March 8 New Roadmap Is Valuable For Homebuyers
February 8 New Online Tool Brings Efficiency To The Household
January 25 It’s Never Too Early To Plan Your Move
January 4 Award-Winning Buildings Are Deserving Of Recognition
 2012
December 21 Transactions Take A Dip
November 30 Navigating Your Way Through Canada’s Housing Market
October 12 Buyers Always Benefit
September 21 Education Is A Lifelong Commitment
September 14 Learn About Up-And-Coming Neighbourhoods
September 7 Emphasis Will Always Be On Professional Services
August 24 Torontonians To Get Things Right
August 17 Resale Home Activity Continues At A Solid Pace
August 3 REALTORS® Have Access To All Kinds Of Information
July 20 Let's Recognize Those Who Do Good Work
July 13 New Mortgage Rules Won’t Hurt Affordability
July 6 It’s all about growing along with our clients
June 29 A look at Mortgage Lending Guideline Changes
June 22 Expect Number Of New Listings To Increase
June 15 Working To Repeal The Land Transfer Tax
June 1 TREB Announces Commercial Building Awards
May 25 Serving Others Is The Highest Honour Of All
May 18 Standing up for Homeowners’ right to privacy
May 4 REALTORS® offer key to a better life
April 20 Affordable Homeownership Benefits Us All
March 30 Keep Your Home Insurance Costs In Line
March 2 It Pays To Lower Your Expectations
February 24 Homes Continue To Sell Quickly
February 17 New Tool Measures Price of Home
February 10 New Building Awards Will Benefit Our City
January 27 Tightening market will mean higher prices
January 13 Expect demand to be strong in 2012
 2011
December 30 Finishing the year on a high note
December 8 It’s Time to Lend a Helping Hand
November 25 Helping those less fortunate
November 18 Building up to National Housing Day
October 28 First-Time Buyers Have Lots Of Options
October 21 Using A Realtor To Buy A New Home
October 14 Celebrating Many Years Of Service
October 7 Renovation Rebate Would Benefit Homeowners
September 30 Land Transfer Taxes Unfair to Home Buyers
September 23 Energy Rebates Should Be A Priority
September 16 Tell City Hall to Target Waste, Not Home Buyers
September 2 Realtors ride for a great cause
August 26 Strong economy sees numbers boosted
August 19 New Web Site Easy to Use
August 15 Learn to keep termites at bay
August 9

Public and Businesses See Eye-to-Eye on Municipal Finance Issues

July 22 Know when it's time to renovate
July 8 Treat first-time buyers fairly
June 17 Time To Repeal The Land Transfer Tax
June 10 Take a tour of the virtual office
June 3 Parking red tape should be streamlined
May 27 Helpful Advice Is Keystrokes Away
May 20 Taking a walk through REALTOR® QUEST
May 13 The social side of real estate
May 6 Staying on top of municipal issues
Apr. 29 Expect demand to remain strong
Apr. 22 Know what to look for in a condo
Apr. 15 Choosing between new and resale
Apr. 8 Learn to use the tools of the trade
Apr. 1 Expect demand to remain healthy
Mar. 25 City needs to cut parking red tape
Mar. 11 Select the right neighbourhood
Mar. 4 Consider investing in a fixer-upper
Feb. 25 Expect homes to remain affordable
Feb. 18 REALTORS® help clarify parking rules
Feb. 11 Learn the benefits of going online
Feb. 4 Increase the value of your resale
Jan. 28 Know the value of a REALTOR®
Jan. 21 Move is on to repeal an unfair tax
Jan. 14 Choose a home that fits your style
 2010
Dec. 17 Working Hard to Make a Difference
Nov. 19 Sorting out HST misconceptions
Nov. 12 Give more thought to going green
Nov. 5 All signs point to a healthy market
Oct. 29 Green your home and save money
Oct. 15 Keeping your best interest in mind
Oct. 8 All signs point to a healthy market
Oct. 1 Condos have become a way of life
Sept. 24 Setting the HST record straight
Sept. 17 Coming to 'Terms' with Real Estate
Sept. 10 Growing Up and going green
Sept. 3 Keeping your best interest in mind
July 16 Charity begins and ends at Home
July 9 Saving the HST with Resale Housing
July 2 Recognizing Our Volunteer Efforts
June 25 Getting to know all your options
June 18 Embracing Diversity in the GTA
May 28 REALTORS® need to know quite a lot
May 14 April transactions nearly met record
May 7 Shopping for the best deal in Town
Apr. 30 The Hidden costs of moving
Apr. 23 Knowing all the local options
Apr. 16 Many ways to cut energy costs
Apr. 2 It pays to renovate before you sell
Mar. 26 Working in your best interests
Mar. 12 Growing Tax burden is taking its toll
Mar. 5 A Professional Touch
Feb. 26 Registry links buyers to homes
Feb. 19 Mitigating the HST tax threat
Feb. 12 Expect strong start to 2010 to continue
Feb. 5 Helping those in desperate need in Haiti
Jan. 29 Having a green home provides savings and peace-of-mind
Jan. 22 REALTORS® assist with Rentals Too
Jan. 15 REALTORS® Give Back
Jan. 8 Why our REALTORS® are the envy of the world
 2009
Dec. 11 Making the jump to home ownership
Dec. 4 Your kind of town, Toronto is
Nov. 27 Emerging Neighbourhoods
Nov. 20 Mid-Month market report: The economic recovery continues
Nov. 13 There's More to us than MLS
Nov. 06 Fix-up Frenzy
Oct. 30 A Taxing Issue: Let's call on future mayor to roll back LTT
Oct. 23 Where to buy
Oct. 16 Value Added
Oct. 10 Market report
Sept. 25 NO sense of harmony
Sept. 18 Vertical City - The GTA is growing up and going green
Sept. 11 Go Site-seeing
Sept. 04 A changing shade of grey
August 28 Gateway to the World
August 21 Vertical City – Toronto is Growing Up
August 14 A new way to hunt for homes
August 7 Home Away from Home
July 31 The Canadian Dream
July 24 Move or Improve
July 17 Weathering the Storm
July 10 Mid-year market report
June 26 Making the Right Connections
June 19 Condo City
June 12 More co-op on grow ops
June 5 Investing in Real Estate
May 29 The News is Good
May 22 Ownership Housing Plays Important Role
May 15 REALTORS® Invest Time to Improve
May 8 REALTORS® take message to Ottawa
May 1 REALTOR® Education
Apr. 24 Community Spirit Alive
Apr. 17 Tech tools of the trade
Apr. 10 Public Wants Toronto Land Transfer Tax Repealed
Apr. 03 Invest In Future
Mar. 27 Agents of Change
Mar. 20 Harmonized Sales Tax Would Hurt Home Buyers
Mar. 13 Actions Speak Louder than Words on Affordable Housing
Mar. 06 Market review: 2009 so far
Feb. 20 Scholarships offered by real estate board
Feb. 13 Make Home Owners Priority of City Budget
Feb. 06 Federal Budget Helps Home Buyers and Owners
Jan. 30 January's Resale Housing Market Report
Jan. 23 TREB to Feds: More help to Homebuyers
Jan. 16 Lifestyles in the 416 and 905
 2008
Dec. 19 Be prepared for closing costs
Dec. 12 Toronto Land Transfer Tax Costs City's Economy $170 million
Dec. 5 Understand your privacy and rights
Nov. 28 Seasons of Real Estate
Nov. 21 Setting the Stage for a Sale
Nov. 14 The Ins and Outs of Inspections
Nov. 7 Outlook still good for GTA
Oct. 31 Taking Advantage of Taxes
Oct. 24 The Ins and Outs of Insurance
Oct. 17 Fighting Back Against Fraud
Oct. 10 Local Market Holds Steady
Oct. 3 Show Good Form During a Deal
Sept. 26 Using Equity to Your Advantage
Sept. 19 Choices Abound but Choose Carefully
Sept. 12 GTA Housing Market Stable
Sept. 5 Points to Ponder This Fall
Aug. 29 Don't Take This For Granted
Aug. 22 A Helping Hand
Aug. 15 A Market Report for July
Aug. 8 A Primer on Attracting Buyers
Aug. 1 Returns on RENOs
July 25 New Federal Mortgage Rules
July 18 Revitalizing the Big Smoke
July 11 Condos Changing the GTA
July 4 Feeding the City's Future
June 27 Recognizing Volunteers
June 20 Buyers, Be Aware of the New Rules
June 13 The Market Remains Healthy
June 6 Reasons to Pick a REALTOR®
May 30 The Power of MLS
May 23 Greening Up Resale Homes
May 16 A Quest for Knowledge
May 9 Lobbying Goes a Long Way
May 2 Toronto Compared
Apr. 25 Beware of Hidden Development Charges
Apr. 18 From the President
Apr. 11 Guarding Against Grow-Ops
Apr. 4

The Importance of the Budget

Mar. 28 Another Way to Invest in Real Estate
Mar. 21 Federal Budget Misses Opp
Mar. 14 Prepare Now for a Spring Move
Mar. 7 Remember to Budget for City's Budget
Feb. 29 From the President