For the most part I use this forum to give me an opportunity to impart the knowledge I’ve gained from my years of experience as a realtor. I offer home buying and other industry tips and facts, which I’d like to think are helpful and which are almost always apolitical. I’m not one to frequently write on political or legislative issues. However, that doesn’t mean I don’t have my opinions, especially when we’re talking about legislation that directly affects the industry I work in.
I mention this in relation to the Municipal Land Transfer Tax or MLTT, which has been on the industry’s radar for a number of years now and which the Ontario Real Estate Association (OREA), The Toronto Real Estate Board and myself strongly oppose. By way of “full disclosure”, I am a Director on for The Toronto Real Estate Board as well as Chair of The Government Relations Committee. For those who are unfamiliar with what the MLTT is, let me give you a brief explanation and history of the tax. The Municipal Land Transfer Tax is a second land transfer tax that can be implemented on a municipal level throughout Ontario. That means that if an Ontario municipality decides to impose this new land tax, it would impact the sale of all homes in that municipality and essentially make the home buying experience in that municipality more expensive for all home buyers. Make no mistake about it – the MLTT is something that would have a negative impact on the housing market in the municipalities that chose to implement it, and the reason why we know this is because of the effect the MLTT has had in the Toronto real estate market.
Toronto is the only municipality thus far to have imposed the MLTT. The city did so in October of 2007 and the negative effect of its implementation on homebuyers and on the city’s real estate market as a whole is absolutely clear as day. In fact, a recent study commissioned by the OREA and conducted by Altus Group Economic Consulting made the counterproductive impact of the MLTT even more evident. Far from stimulating the real estate market in Toronto, the MLTT, which added as much as $6,206 to the average price of a Toronto home in 2013, has cost the city $2.3 billion in economic activity and almost 15,000 full-time jobs since the tax’s implementation. What’s more, further research revealed that 85% of Toronto residents agree that the MLTT has made home ownership in the city more difficult; and 71% of Toronto residents expressed that the MLTT has caused them to delay their decision to purchase a home. These are clearly not positive figures, and these, as well as others, demonstrate that in making the home buying experience more expensive (in a market that is already extremely expensive) the MLTT has done nothing but stunt the Toronto housing market. Simply put, the economic return from this new land tax is outweighed by the disastrous toll it’s had on Toronto’s overall economy.
With all this negative evidence, one would expect that the MLTT would’ve already been swiftly repealed in Toronto. Sadly, that hasn’t been the case. Even more unfortunately, there is the distinct possibility that other municipalities in Ontario may impose the MLTT in their local real estate markets, something that the OREA and I are strongly against and are actively working to prevent.
We breathe a small sigh of relief in knowing that many Ontarians understand the deleterious impact of the tax. Imposing the MLTT in other Ontario municipalities could add as much as $3,680 to the cost of a new home. It’s no wonder then that 69% of Ontarians believe that the MLTT would make them incur more debt in order to pay off the tax; and that 73% of Ontarians believe that this second land tax, if imposed, would make them unable to spend as much on furniture and renovations on their new home. This last statistic specifically lends support to the idea that the MLTT not only negatively impacts the real estate market, it also casts a withering touch to the multitude of other industries that depend on the real estate industry to survive.
For me as a realtor, there is nothing that gives me more joy than seeing a buyer purchase that brand-new home, that home of his or her dreams. The feeling of finally being a homeowner is a wonderful thing, and according to most of Canada – and 90% of Ontario residents – owning a home is a dream that Canadians aspire to.
The reality is that the MLTT is an unnecessary tax that in the long run will do more economic harm than good. More importantly, from my perspective, it makes that grand goal of being able to purchase a home all the more difficult for Canadians. Ontarians already have one land tax to deal with when purchasing a house – that should be sufficient. That’s why I will continue to say NO to another home owner tax.
For more information on the subject and for ways in which you can voice your opposition to the MLTT in your municipality, please feel free to visit www.DontTaxMyDream.ca.