Luxury home tax could yield $18 million for Toronto in 2021, if approved
TORONTO -- A Toronto budget briefing note reveals that the city could yield an additional $18.7 million in revenue this year—if city council is willing to implement a luxury home tax.
Properties valued at more than $2 million are currently subject to a municipal land transfer rate of two-and-a-half per cent, in addition to provincial fees, but proponents argue that a one-per-cent hike could generate much-needed cash for affordable housing and transit.
“It’s really about looking at where we can generate revenue to pay for the things that we need here in the city of Toronto,” Councillor Brad Bradford told CTV News Toronto. “We have an affordable housing crisis. We certainly have a lot of issues related to transportation and mobility.”
In response to a request from the budget committee, city staff calculated that an additional $18.7 million could be generated if the municipal land transfer tax was increased to three-and-a-half per cent for homes valued at more than $2 million. If the threshold was set at properties worth $3 million, the city would generate an additional $6.4 million.
Some luxury real estate specialists questioned the notion of setting the threshold at the $2-million mark.
”Imposing it on properties only north of $2 million, I think there might be a better way to go about it where it’s more even across the board,” said Max Taylor, a luxury home marketing specialist
City staff also noted that increasing the cost of luxury home sales could incentivize buyers and sellers to transact below the cut-off, slightly reduce the liquidity of real estate, and discourage current home owners from up-sizing, potentially tightening housing supply for mid-value homes.
“It’s going to have an adverse effect on the supply,” Dianne Usher, managing broker with Sotheby’s International Realty Canada told CTV News Toronto.
“Sellers are becoming increasingly weary about selling because they’ve got nowhere to go, so this will just add to the inventory shortage.”
“We feel that the municipal land transfer tax is an unfair tax to begin with.”
If approved by city council, the change would require at least two months to implement, according to city staff.