New taxes take toll on buyers

Tara Rosen’s response to Toronto’s new Land Transfer Tax is simple and to the point.

“It sucks.”

The sales representative at the Coldwell Banker The Real Estate Centre, who works closely with buyers and sellers in Scarborough, says she’s angry at the new levee because she says it will hurt home sales in the area.

The Land Transfer Tax and the Personal Vehicle Registration Fee, designed to help the city with its current fiscal crisis, were approved by Toronto city council on Oct. 22.

Homebuyers will have to pay 0.5 per cent tax on the first $55,000 of a home’s value, one per cent on the next $345,000 and two per cent on more than $400,000. First time buyers will receive a tax rebate of up to $3,725.

Chin Lee, Ward 41 councillor, voted against the measure and says he’s strongly against the tax because of the negative effect it will bring to the market.

“Some people say the tax is nothing for the buyers because they are willing to pay a large amount already, so the tax will not have a big influence on them,” Lee says. “That’s not right.

“People coming into the country, chasing the ‘North American dream’ and working two to three jobs to pay for the mortgage – of course they are affected,” Lee says.

Now the only way to avoid the tax is either to sign a purchase agreement no later than Dec. 31, or to close before Feb. 1.

“A big rush will happen before the end of this year,” Rosen says.

However, Helen March, another representative who also specializes in Scarborough real estate, doesn’t think so because “most buyers are already resigned to the fact that the government is going to have the tax anyway.”

Even if they still can’t accept that fact, they’d better stay calm, Lee says, because there is a possibility that the price of houses will drop due to the negative effect brought by the tax.

At the same time, he points out the possibility that house buyers will move out of GTA.

“I think more people will buy houses in Markham and Pickering since these regions haven’t been charged yet, so a lot of cross border shopping will happen,” he says.

Representatives didn’t deny the possibility of movement, either.

Doug Gordon, who works with RE/MAX First Realty Ltd., says he can see an increase on the housing prices outside of GTA, and he will suggest his clients take a look further east instead of north or west.

“Have a look at Durham,” Gordon says. “Regions in the east have better transit systems and the communities are good.”

However, Ward 38’s Glenn De Baeremaeker is in favour of the new tax and believes anyone who says the tax will have a long-term impact is foolish.

“My parents have a house worth over $300,000. Now if the buyer comes to them and asks: ‘Can you lower the price for 1%?’ Will they be influenced? Absolutely not. When you are already making that much money, you don’t care about that 1%,” Baeremaeker says.

He doesn’t believe the tax will ever stop immigrants coming and settling in Toronto.

“Buying and selling have always been going on in his riding, and they will continue in the future because Toronto is such a rich, clean, multicultural and beautiful city,” he says. “Our problem is a problem of success.”

About this article

By: Tianpei Ma
Posted: Nov 5 2007 12:00 pm
Filed under: News