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Land Transfer Tax Rebate Doubles - "Small Change" For First-Time Buyers

In its fall economic statement issued on Monday, the Liberal government announced that starting January 1, 2017, first-time homebuyers in Ontario will see a 100% increase in the maximum rebate on the province's land transfer tax - up to $4,000 on house and condo purchases.

Part of the funding for the change comes from a simultaneous increase in the land transfer tax rate on luxury properties. Homes valued above $2 million will soon be dinged at 2.5 per cent - a half per cent change that is predicted to reap the government $105 million a year in tax revenues annually.

Further Measures Still Needed

Although surely a welcome break for new buyers, Premier Kathleen Wynn nonetheless qualified the adjusted rebate as a "small change" and stated that no one "should expect a radical shift in the way the housing market works in Ontario."

Meanwhile, skyrocketing housing prices are already expected to bloat the province's tax revenues this year by an extra $314 million or 15% more than had been forecast in February. The figures have critics wondering if the government is doing enough to address the affordability crisis in the housing market.

A look back in history reveals that the land transfer tax is not keeping up with the times. While housing prices have increased relentlessly since 1989, the tax's rates and its brackets have remained unchanged. Lobbyists at the Ontario Real Estate Association are calling for a complete exemption from the tax for first-time buyers.

Acknowledging the problem, the Premier simply stated that she intends to continue the "talk about whether there's more that we need to do."

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