There are a number of ways to determine if MPAC’s assessed value of a property is accurate. Ask yourself:

• could you have reasonably expected to sell your property for its assessed value on January 1, 2008 (the date on which your assessed value is based).
• does MPAC have accurate information about your property.
• what have similar properties in your Toronto neighbourhood sold for in and around January 1, 2008.

Toronto Homeowners
Feeling Property Tax Squeeze

If you do not agree with the current assessed value for your property, you can ask MPAC to reconsider their assessment. However, the deadline to file a Request for Reconsideration must be done by March 31. And that would be tomorrow.

To get a copy of this form, click here to be directed to the MPAC Property Owners page. From there you can download a copy of the request form, which can be faxed, emailed or mailed (postmarked by midnight March 31). You can also submit your request online through AboutMyProperty.

I hope you’re happy with MPAC’s response to your request but, if not, you can file a formal appeal with the Assessment Review Board. For more information about the appeal process, click here.

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Really, who hasn’t had one or two epiphanies in the course of a lifetime? These moments of revelation can inspire us to take action immediately (“I Quit!”, “It’s Over!”, “I’m Doing This!”). Or at least to realize, at last, that changes have to be made soonest in some aspect of our lives. Major or minor.

Actually, it’s happening in Toronto right now. If you’d like to witness the epiphany in action, just hang around your local gas station; there’s a whole lot of “great revelation” going on at the gas pumps these days. And who is the beneficiary of the gas pump epiphany? Why, that would be the Toronto 2008 real estate market!

Toronto Real Estate Market
Checks Out Price Of Gas

At around noon today, my local Toronto gas station posted a price of $1.248 CDN per litre, which for my American readers translates to about $4.72 CDN a gallon. I think. Although I write extensively on Toronto real estate market statistics and property taxation, I’m not a mathy person; if you disagree with my calculations, please comment or contact me directly.

So what does the price of gas mean for the Toronto real estate market?

It means that a lot of commuters are taking a hard second look at the amount of money they spend to fill their SUV-sized gas tanks (baby, it’s like a second mortgage!) and realizing it just might be time to take another look at Toronto homes for sale.

It means that although the Toronto real estate market is off last year’s record-setting performance, and uncertainty exists, many potential Toronto home buyers are now thinking they’d rather take their chances with a bit of a bumpy descent into a more balanced housing market than bet there’ll be a drop in the price of gas in the near future (or lifetime). Because we all know that’s one commodity that truly has unlimited potential for price increases.

Toronto Home
Buyers Do The Math

What happens when the bloom is off the rose, so to speak? When the appeal of larger, newer housing is dragged down by the reality of higher gas prices? If you work in Toronto and live elsewhere, you can no longer ignore the significant cost of commuting. And unlike the Toronto municipal land transfer tax, which is offset by the lowest property taxes in the Greater Toronto Area (GTA) and is only paid once per transaction, the cost of gas is offset by … nothing … except a larger house you probably don’t get to spend that much time enjoying.

Sure, a move would mean (much) less house for the money, a house that probably needs some work down the road (heh!), but more money for the other essentials of life such as groceries and cable. And in many cases a much nicer pace of life as time otherwise spent idling on the 401 or 400, draining the gas tank, can be spent with family, friends or just sitting in a chair staring off into space. Hey, don’t knock the chair sitting; when you never have time to do this it’s a treat!

Need some help with your gas pump epiphany? Call Lauren at 
416–550–6991 and let me help you find the Toronto home that will change your life!

The one missing piece was the “official” definition of a first-time home buyer for purposes of the Toronto Land Transfer Tax rebate. At last, I have this definition, and it applies for both the Toronto and provincial land transfer tax rebates.

Do You Qualify As First-Time Home Buyer?

The Toronto Real Estate Board (TREB) advises the following with respect to eligibility. And it’s verbatim as I have not yet been able to find a link to this information on the TREB public web site.

“According to the City of Toronto, eligibility rules for the Toronto Land Transfer Tax first-time buyer rebate will mirror provincial rules, as follows:

• The purchaser must be at least 18 years of age.
• The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
• The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
• If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, NO refund is available to either spouse. Note: If a purchaser’s spouse owned an interest in a home BEFORE becoming the purchaser’s spouse, but not while the purchaser’s spouse, the purchaser may be eligible for some rebate.”

Toronto Home Buyers Exercise Caution

I can advise you of the rebates you qualify for based on purchase price and first-time home buyer eligibility. However, if you do not qualify both land transfer taxes will be payable at the time of registration.

Although most of the eligibility rules are straightforward (you’re either 18 years old or you’re not!), you may want to consult with your lawyer, especially with respect to the spousal ownership rules if your situation so warrants.

Don’t jeopardize your closing! If you require the land transfer tax rebates in order to have sufficient funds to close, make sure you know with certainty as to whether you qualify before signing that offer.

Actually, there has been quite a bit of information to wade through with respect to this tax. To accurately capture the details and align deals to take advantage of available rebates has been a bit like taking aim at a moving target, but I know how important this information is for many Toronto home buyers. So, let’s go for the bull’s eye!

Toronto Drops Upfront Tax Payments

I believe the key piece of information in the latest news release is the fact that those who are eligible for full rebates are no longer required to pay the tax upfront, and then claim a rebate (with one exception; see below). Very good news!

Here’s a recap of what transactions are exempt and the available rebates.

Toronto Buyers Hustle To Close

As previously announced, the Toronto land transfer tax is not payable on transactions that close before February 1, 2008 (the date the tax takes effect). This applies to all home buyers, regardless of when the agreement was entered into (which means when the offer was accepted, either firm or conditional). I suspect many deals are being amended in order to take advantage of this exemption. If possible, go for it!

If your transaction closes on or after February 1, 2008, this tax is payable at the time of registration; however, the City of Toronto allows for certain rebates as follows.

Toronto Tax Rebates May Apply To You

You are eligible for a full rebate of the Toronto land transfer tax if:

• Your transaction is grandfathered (you entered into an agreement on or before December 31, 2007), regardless of when you close your deal.
• You are a first-time home buyer (new and resale) and as such are eligible for a rebate of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000).

However, there is one important exception to the upfront tax payment:

If you are a first-time home buyer with land transfer tax payable above the maximum rebate amount (you’ve bought a home for more than $400,000), you will be required to pay the full tax, and then receive the maximum rebate of $3,725 from the City. Once the Teranet collection system has been modified to handle this type of transaction (scheduled for Spring of 2008), you will only have to pay the balance of the tax above $3,725 at the time of registration.

This is a very welcome drink for parched Toronto first-time home buyers who, up to now, have been excluded from this rebate if they did not buy newly-constructed houses.

Toronto Asks
What’s On Tap?

Toronto first-time buyers will be eligible for a rebate from the provincial government of up to $2,000 based on total Provincial Land Transfer Tax to be paid. This measure will be effective for agreements of purchase and sale entered into after December 13, 2007.

I have asked for clarification from the Ministry of Finance and the Toronto Real Estate Board (TREB) with respect to the wording “entered into”. To confirm, this refers to the date an offer is accepted (either firm or conditional). Of course, buyers are always advised to speak with their lawyers about any questions or concerns they might have regarding their real estate purchase.

Rebate Not Automatic Until Law Passes

This change is being implemented by provincial legislation introduced on December 13, 2007 and must first become law before immediate refunds can be claimed through electronic or paper affidavits (as is done for newly-constructed houses).

In the meantime, buyers of resale houses must pay the Provincial Land Transfer Tax at the time of registration. Following registration, buyers can submit a Refund Affidavit to the Ministry of Revenue and they will be processed and refund cheques issued once legislation is passed. However, it is not known when this will take place.

So until the law is on your side, calculate the full cost of the Provincial Land Transfer Tax and have this money available for closing. Don’t be caught short and jeopardize closing your deal. Your cheque will be in the mail (someday).

Well, don’t roll out the yellow brick road just yet, Dorothy; once the math is done and those most likely to be impacted identified, Toronto may still be the Emerald City for first-time and move-up Toronto home buyers.

Toronto Tax Relief for First-Time Buyers

In an earlier post on this topic, I mentioned how pleased I am that first-time buyers (new and resale) will receive a rebate of the municipal land transfer tax of up to $3,725. This equals a 100% rebate on homes purchased for up to $400,000. According to the City of Toronto, for homes valued at greater than $400,000 the buyer would be taxed according to the prescribed rates and receive a rebate of $3,725.

So, if our first-time buyers are realistic as to what they can afford to buy, Toronto is still a viable (and desirable!) option.

Toronto Move-Up Buyers Take Hardest Hit

It would appear that the Toronto Land Transfer Tax will be most painful to the move-up buyer as they will be paying thousands of dollars more in closing costs in order to buy their Toronto dream home. But will this tax be the final straw that drives the Torontonian into the arms of the not-Toronto cities?

Not necessarily. Not if they do the math and take into account Toronto property taxes versus taxes in other southern Ontario cities. Also to be considered is the cost of the commute to Toronto from the outlying Regions. Check out the cost of the monthly adult pass to ride the GO to Union Station.

Toronto Real Estate Agent Predicts Tax Fall-Out

My prediction is that this new tax will not cause the move-up buyer to flee Toronto unless they truly wish to live elsewhere; a classic case of the emotional decision rationalized through logic. Toronto will continue to be seen as good value. Prudent buyers will, as always, give careful thought to all the pros and cons of where they want to live versus what they can afford. And calculators will always be useful!

However, as a result of this strong position, City Council was compelled to make several amendments to the original proposal. Amendments include a reduced rate, grandfathering for certain transactions (those entered into on or before December 31, 2007) and rebates for first-time buyers of new and resale homes. Hurrah … sort of!

Although the City has not yet provided complete details on how the tax is to be implemented, here is what I know to date on how this tax will work. Of course, any clients with concerns and/or specific questions as to how this tax will affect their upcoming closings should consult with their lawyers.

Toronto Home Buyers Crunch the Numbers

These are the rates to be applied for residential purchases:

• 0.5% of the amount of the purchase price up to and including $55,000, plus
• 1% of the amount between $55,000 and $400,000, plus
• 2% of the amount above $400,000.

For commercial/industrial purchases:

• 0.5% of the amount of the purchase price up to and including $55,000, plus
• 1% of the amount between $55,000 and $400,000, plus
• 1.5% of the amount between $400,000 and $40 million, plus
• 1% of the amount above $40 million.

No time to do math? An easy-to-use residential calculator is available at www.nohomebuyingtax.com.

Toronto City Council Grandfathers Existing Home Purchases

Timing is everything when it comes to avoiding this second land transfer tax. It comes down to this: When Did You Buy and When Are You Closing?

A grandfathered transaction is a deal that is entered into on or before December 31, 2007. These buyers will receive a full rebate of the municipal land transfer tax, regardless of the closing date; however, the date your deal closes determines whether you are charged then rebated the tax, or not charged the tax. The important dates to keep in mind are:

• Buyers with a deal entered into on or before December 31, 2007 with a closing date before February 1, 2008 will not be charged the municipal land transfer tax.
• Buyers with a deal entered into on or before December 31, 2007 with a closing date on or after February 1, 2008 will be charged the municipal land transfer tax, which will then be rebated by the City of Toronto.

Teranet will collect the tax for the City of Toronto. Once the grandfathering policy is reflected in Teranet’s collection system, grandfathered transactions will be exempt from the municipal land transfer tax at the time of registration. The City has indicated these changes will be implemented in the Spring of 2008.

What If My Toronto Home Isn’t Grandfathered?

If you enter into an accepted offer after December 31, 2007, these are your important dates:

• Buyers with a deal signed after December 31, 2007 with a closing date before February 1, 2008 will not be required to pay the municipal land transfer tax.
• Buyers with a deal signed after December 31, 2007 with a closing date on or after February 1, 2008 will be required to pay the full municipal land transfer tax.

Toronto Tax Relief for First-Time Home Buyers

I’m delighted that first-time home buyers (new and resale) will receive a rebate of the municipal land transfer tax of up to $3,725. This equals a 100% rebate on homes purchased for up to $400,000. According to the City of Toronto, for homes valued at greater than $400,000 the buyer would be taxed according to the rates above and receive a rebate of $3,725.

Once the first-time home buyer policy is reflected in the Teranet collection system (targeted for the Spring of 2008), first-time buyers will be exempt at the time of registration. Until that time the tax will be charged, which will then be rebated by the City of Toronto.

Why Pay Tax If You Don’t Have To?

For any of my buyers waiting for the signal to buy, this just might be it. Don’t pay more land transfer taxes than necessary. The market remains balanced (good for both buyers and sellers), mortgage financing is available for those who qualify, and interest rates are still manageable. As that well-known commercial goes, “Save Your Money”.