New taxes recommended on Toronto real estate purchases

The surging Toronto housing market has some people happy, and others concerned. Supply, demand, foreign buyers -- all these factors have an impact on real estate in Ontario's capital. A committee has issued a report with ideas aimed at curbing the market a bit, and bringing prices back down to Earth.

One idea is to impose a foreign buyer tax, much like the one now being levied in Vancouver. The tactic appears to be effective, insofar as it reduces foreign investment. Since its introduction in Aug. 2016, a demonstrable drop in the number of transactions in that city has occurred.

Additionally, a progressive surtax is being recommended. This tax would be on real estate, and payable only by buyers who do not pay local income tax. The idea is to limit the number of homebuyers who are not contributing to the labour market because they either have foreign capital, or they are wealthy Canadians who have strategically disbursed their assets to avoid paying taxes. The tax would apply to homes over a certain value, with an increase in the amount of tax as the value of the home climbs.

Although both of these taxes are mere suggestions at this point, they are indicative of a rapidly changing real estate market in Ontario. Anyone looking to enter the market, or shift position within it, would do well to consult with a professional when buying and selling. A lawyer who handles real estate in this province can advise on the latest regulations and requirements, and ensure there are no hidden surprises during a transaction.

Source: Financial Post, "Foreign buyer tax plus a surtax on expensive homes needed to rein in Toronto housing: report", Nicole Thompson, March 13, 2017

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