Despite a tremendous outcry from the public and special interest groups, it looks like David Miller has gained the necessary approvals for his controversial new land transfer tax. What does this mean to prospective home buyers? To put it simply, on an average home purchase in Toronto of $400,000, the land transfer tax portion of your closing costs just jumped from $4500 to $9000. This doubling of the effective tax rate will raise the city an extra $300 million per year.

This is a cash grab in the worst possible way. Taxes will be doubled but home buyers will have nothing to show for it. Miller says that raising these taxes are the only way to pay for the City's massive budget shortfall. Apparently he sees no other solution than to force the entire financial burden of the city upon 5% of it's residents (home buyers make up about 5% of the city's residents in any given year).

Toronto will soon have the highest land transfer tax rate in the country, and possibly the entire continent, depending on how it finally shakes down. Home buyers contribute approximately $2 billion to the city's economy. This number is all but guaranteed to decrease once this new tax goes through. Make no mistake, the city will feel the impact of this new tax.

I could go on and on, but I won't. After all, my bias as a Real Estate Agent is obvious. What about you blogTO? I'd love to hear your thoughts on this issue.

Photo by funkaoshi from the blogTO Flickr pool.