On December 8, 2016 Bill 70 was passed by the Ontario Legislature and received Royal Assent. One of the Bill's most notable features is its increase to the Ontario new homebuyer's Land Transfer Tax (LTT) rebate, whereby the rebate offered to first homebuyers will increase from $2,000 to $4,000. However, in the shadows of the Bill's LTT rebate, is an increase to LTT paid on properties (other than homes with a value of less than $2 million) that will have a significant impact on real estate transactions across the province.
Though the Bill will make buying your first home marginally more affordable, the increased rate of LTT on transfers of homes over $2 million, commercial properties, industrial properties, agricultural properties and multi-residential properties will make buying these classes of real estate much more costly.
The LTT rate on consideration over $400,000 for properties (other than single family homes) will increase from the current 1.5% to 2.0%. For example, LTT on the purchase of a commercial property for consideration of $2,000,000 will rise from $28,475 to $36,475, an increase of $8,000.
With respect to single-family homes purchased for more than $2 million, the LTT rate will increase from the 2% to 2.5% on any consideration over $2 million.
The increased rate of LTT will apply to registrations made on or after January 1, 2017. In the event that an agreement of purchase and sale was signed prior to November 14, 2016, the current LTT rate will apply.
In addition to Bill 70, the Ontario Minister of Finance announced on November 14, 2016, that in an effort to make housing more affordable, there will be a freeze on municipal property tax on multi-residential housing. We continue to await details on the implementation of this announcement.
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