Building Ontario Up for Everyone: 2016 Ontario Economic Outlook and Fiscal Review banner

: Helping People with Housing Affordability

BACKGROUNDER — November 14, 2016

A healthy, stable housing market is vitally important to Ontario and home ownership has become a key factor in many people’s long-term financial security. Increases in home prices and rents have made housing affordability a concern for a growing number of people. The government recognizes that it is an increasingly challenging time to enter the housing market, especially for young families.

Making Housing More Affordable

Ontario is taking action to address housing affordability. It is:

Enhancing the First-Time Homebuyers Refund:

  • Proposing to double the maximum Land Transfer Tax (LTT) refund to $4,000 for eligible first-time homebuyers, as of January 1, 2017.
    • With the increased maximum, no LTT would be payable by qualifying purchasers on the first $368,000 of the cost of a first home.
    • With the doubled refund, more than half of first-time homebuyers in Ontario would pay no LTT on the purchase of their first home.

Protecting Renters:

The government is taking action by freezing the property tax on apartment buildings while reviewing how the high property tax burden on these buildings affects rental market affordability. The average municipal property tax burden on apartment buildings is more than double that for other residential properties such as condominiums.

Modernizing the Land Transfer Tax

The LTT rates have not changed since 1989. The LTT is payable on the purchase of any land in Ontario and is usually based on the value of consideration, which is typically the purchase price. As a result, the government is proposing to modernize these rates to reflect the current real estate market. Overall, the proposed rate increases would impact less than one per cent of purchasers of homes in Ontario.

Revenue generated from proposed increased LTT rates would be used to fund the enhancements to the first-time homebuyers refund.

As of January 1, 2017, the government is proposing to increase LTT rates on the portion of the value of consideration:

  • Above $2 million, for transfers of one or two single-family residences, such as detached and semi-detached homes, townhomes and condominiums, to 2.5 per cent from two per cent.
  • Above $400,000, for all other types of property, such as commercial, industrial, multi-residential and agricultural properties, to two per cent from 1.5 per cent.

Current and Proposed Rates

Current and proposed rates for properties with one or two single-family residences:

On the Portion of the Purchase Price Current Rates Proposed Rates
Up to and including $55,000 0.5% 0.5%
Over $55,000 up to $250,000 1.0% 1.0%
Over $250,000 up to $400,000 1.5% 1.5%
Over $400,000 up to $2,000,000 2.0% 2.0%
Over $2,000,000 2.0% 2.5%

Current and proposed rates for other types of properties:

On the Portion of the Purchase Price Current Rates Proposed Rates
Up to and including $55,000 0.5% 0.5%
Over $55,000 up to $250,000 1.0% 1.0%
Over $250,000 up to $400,000 1.5% 1.5%
Over $400,000 1.5% 2.0%

Going Forward

The government remains open to solutions that would help improve housing affordability. Ontario is proposing to collect additional data, such as the type of property, intended use, and citizenship and residency status of purchasers, which would help inform future policies. As part of this proposal, the Province will work with the Information and Privacy Commissioner of Ontario to ensure that the appropriate steps are taken to protect all collected personal information.

The government is also proposing to restrict eligibility for the LTT refund for first-time homebuyers to Canadian citizens and permanent residents as of January 1, 2017. First-time homebuyers who become Canadian citizens or permanent residents within 18 months of purchasing a home could apply for the refund.