City
Thinking About Buying a House? David Miller Says Think Again
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.
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Maybe user fees for the DVP instead?
If anything, maybe this tax increase will help to slow the out-of-control Toronto real-estate market, as more people will decide not to buy a new house but stay put in the one they have. (And clearly, as a real-estate agent, this is the real threat that concerns you and your commissions.)
Perhaps this real estate agent is fine with Toronto's finances as they are -- roads crumbling, services degrading, the city responsible for funding areas it should not be, and yet not having the power to raise taxes?
Here's an idea: instead of bitching about exhorbitant land transfer taxes how about bitching about exhorbitant real estate agent fees? Do you really think you deserve 5%? That's a hell of a lot more than the city is taking. Is that how you can afford to spend the time to post on blog.to instead of being out working for a living?
Finally, why not apply pressure on provincial and federal politicans who have set up Toronto's finances to fail in the first place? If you do, maybe we won't need this kind of tax.
I wish Toronto wasn't in debt, and could lower taxes and provide better services. But that's scheduled for the future thanks to the shortsightedness of many.
Why is this good (other than the pleasure it may give you in reducing the income or Real Estate agents)?
2. "Why do we continue to see opinion articles from real estate agents with very obvious bias (first many "hot market, buy!" and now this) masquerading as news. Can the editors at blog.to please apply some basic editorial standards?"
Yes, it is terrible that the page employs one author who is not an artiste type and may offer a different perspective. Get a grip - the author disclosed his conflict of interest right in the piece, which is more than I can say for most posts here.
3. "Perhaps this real estate agent is fine with Toronto's finances as they are -- roads crumbling, services degrading, the city responsible for funding areas it should not be, and yet not having the power to raise taxes?"
This is a non-sequitur. The city could improve its finances in any number of ways (for example, through spending cuts or other taxes) but has chosen a form of tax that the author finds inequitable. Provide a reason why this tax is better than another tax the city might levy, and you might be able to have a discussion with the author, instead of a shouting match.
4. "Here's an idea: instead of bitching about exhorbitant land transfer taxes how about bitching about exhorbitant real estate agent fees? Do you really think you deserve 5%? That's a hell of a lot more than the city is taking. Is that how you can afford to spend the time to post on blog.to instead of being out working for a living?"
Lets see, the real estate agent does some work to earn its commission. The city does absolutely nothing (in fact, they might all be out at the zoo or golfing with their free passes). On that basis, one is price paid for services rendered and the other ... I think its called extortion. Poster, please let me know what you do for a living so I can follow you around all day and tell you you are not worth the money.
5. Generally, where are all the people who commented on the authors previous posts decrying the high cost of real estate and the unfairness (hello, sense of entitlement) that such high costs exclude them from the Toronto real estate market? Certainly they can't be cheering a measure that raises the costs even further.
This is a disguised wealth tax by an NDP mayor who has drastically oversold and underperformed, and will be remembered as such at voting time.
John-good point. Will this drive home buyers back out to the 'burbs, adding to sprawl and sprawl-related problems?
GaryC-I was talking to a colleague and they were expressing a similar sentiment. Basically, the argument is it only happens once every 5-10 years and it's only a few thousand bucks, so will it really affect anything?
uSkyscraper-maybe then this new tax should only be on $1M+ properties, or some other high-water mark. Something to think about...
Ryan-I would address your comments, but instead I'll defer to x_the_x!
x_the_x, thanks for coming to my defense. I thought I made my own bias clear and never claimed to be offering anything more than my own opinion, but meh, what are you gonna do? All I have to say about your point #4 is LOL ;)
In general, I think this sort of tax is short sighted. The housing market is a driving force in the economy right now. A tax like this might not have much effect in the short-run, but in the long-run, when interests rates go up to their historic levels, a significant percentage of the population who are considering home ownership will have one more hurdle to cross and many will not be able to make the leap. This WILL hurt the economy and have a trickle down effect that in the end will cost people their jobs.
Spending cuts to equal $300 million? That is a joke. Do you suggest the city stops running transit? That'll save money. This is a good tax, it's an admission to Toronto which helps fund all our wonderful crumbling infrastructure. Although I personally think a 905er type tax is better (ie. entertainment tax, alcohol tax) since so many come in and up to 5% doesn't add much to the price of any entertainment.
#4 - Lets see, the real estate agent does some work to earn its commission. The city does absolutely nothing
You seem not to walk on sidewalks, drive on the road or really leave your home. Wonder who does the policing, puts out fires or moves people around the city.
5. Generally, where are all the people who commented on the authors previous posts decrying the high cost of real estate and the unfairness (hello, sense of entitlement) that such high costs exclude them from the Toronto real estate market? Certainly they can't be cheering a measure that raises the costs even further.
If you can't afford this fee, you definitely can't afford to buy a place. $5000 is not going to stop you from buying a place if are in a position to.
i've spent the past 5 years raising a measly 10% downpayment for a property only to be sidelined by a mayor i've never voted for. i'd be happy to pay for city services if Miller could learn how to run a budget.
i think it says something that more than 50% of Torontonians are ok with the new taxes. i say go Mayor Miller...maybe this will cool the housing market along the way to getting the city in good financial stead. i don't think either of those would be a bad thing.
New taxation powers for the city is not the right answer, or at least not on it's own, until the Province steps in and either resumes what should always have been the provincially funded services they downloaded during Harrishell or otherwise restructures things so the L FSAs start to pay their fair share.
Does nobody remember that he is the cause of Toronto's woes?
I'm reading all this Harris nonsense in the comments, it was a decade ago...Miller is screwing Toronto into the ground now. Perhaps spending money on office renos, paying off your own screw up with the downtown airport, bike paths, and doubling of tax on the middle class is not the smartest way to spend the money you get from over burdened taxpayers.
Miller's the biggest jackass we've ever had for a Mayor.
Those of you who couldn't be bothered to go out and vote can thank yourselves that he's in office again.
Now we're all paying the price.
If the province, which is now running a surplus, wanted to be fair to the tax payers, and do what Miller has been asking for, they would remove the equivalent provincial tax on vehicle registration and land transfers, leaving no net change to us, and would help balance both the province's and city's books.
That reasonable proposal has been the cornerstone of fixing city finances for a long time now. But it always falls on the deaf ears at Queens park.
It is pretty hard to deny that Toronto is getting screwed by the downloading of provincial services, but I am not sure directly passing this off on only a select group of residents is a responsible plan. I would have liked to have seen a more strategic, well thought out plan as opposed to simply raising costs across the board.
It just seems pretty short sighted and I worry you could see it drive home buyers out of Toronto and create even more people who pay taxes to another municipality but use Toronto's services (roads, etc.).
You scream about the NDP mayor and taxes, but how many of you people idiotically voted for the "common sense revolution" which amalgamated the city, downloaded responsibilities to it, and drastically curtailed provincial funding for many programs? I suspect given your comments the number is actually quite high.
Frankly, this ideology is blind and selfish. The right wing screams for efficiency gains and decry lack of democracy but when they were in power they made things less efficient, forced top down decision making, eliminated as much local democracy as they could get away with, and now the city can barely function as a result of it.
Thankfully people who think like you number in a minority in this city. I just wish you were a minority in the country.
Even a cursory glance at the budget sees at least $300M in cuts. Don't forgot that our dear charlatan mayor handed out half of it ($150M) to Bombardier workers in Thunder Bay. Is it equitable that Toronto homeowners should be subsidizing Thunder Bay workers through a property transfer tax?
2. "#4 - Lets see, the real estate agent does some work to earn its commission. The city does absolutely nothing
You seem not to walk on sidewalks, drive on the road or really leave your home. Wonder who does the policing, puts out fires or moves people around the city."
It behooves me to point out that homeowners also pay property and other taxes which fund these things. The issue isn't whether the city provides general services from general taxation, its whether the city provides any services specifically to the class of homeowners who would be compelled to pay the new tax. They clearly don't. The objective then is to try and understand why a tax is being levied on a specific group (homeowners) rather than all taxpayers to fund the underfunded programs you mention. I haven't heard any compelling justification. The argument seems to be that it will help slow down the Toronto real estate market. This argument begs the question. As I stated above, why is this seen as a good thing? Real estate activity generates and permits the accumulation of wealth, promotes social mobility, generates income for workers in the real estate services industry and construction industries, etc. etc. ad nauseum.
3. Ryan - I won't repeat your screed for fear that I too will look like a maniacal street preacher at Yonge and Dundas. Suffice it to say, grind your axe elsewhere. You know nothing about the politics of opponents of this tax - let alone who they vote for or voted for. I suspect many voted for Miller but oppose him on this issue.
Perks etc. might be a small portion of the overall budget, but so is this new tax. All I was trying to illustrate was the choices this council and this mayor are making with your money. As I have stated above, I do think, notwithstanding the costs of running essential city services, there is room in the budget such that this tax is unnecessary. While I agree that provincial downloading was inept, so too has been this Mayor's public finance management.
Put a "no junk mail" sign on your mail box, and recycle any that get through.. PLEASE!
Where else can all of this go?
HAHA ZING!
One other thing to remember - people on low incomes, disabled, seniors can either put property taxes against Ontario tax or have them deferred/cancelled. With garbage removed from property tax they lose the ability to do this. No wonder Miller didn't renew his NDP card.
If you're all looking forward to a slump in the housing market and an economic downturn why don't you pack up and move to Detroit. I hear it's lovely.
fact: this city is basically run by unions who do/get whatever they want (case in point: a wildcat strike with no consequences). no wonder the city is in such bad debt. and mayor miller, being a union supporter, will be re-elected time & time again, as too many people who can't think for themselves will receive the call from their union telling them who to vote for and will say "ok".
Comparing Real Estate Agents' commissions with this land transfer tax is just plain silly. Commissions are a fee for a service rendered. Commissions have always been and will always be completely negotiable. Now when you go to buy your next house and you get a bill for $9000 to 'transfer the land', see what happens when you try to negotiate this with Mr. Miller. Conversely, imagine you want to sell your house and your Real Estate Agent tells you they are <B>doubling</B> their commission rate because they are currently spending more than they are earning and they need you to help them 'balance their books'.
Frankly, the work you do is pathetic in comparison; though you do seem to put quite a bit of work into advertising yourself on blog.to under the guise of "informative" (marketing & opinion) articles.
Frankly, $2.3 million for an office renovation is hardly nothing in the grand scheme of the city's budget. Cutting corners there isn't going to save the TTC. Put things in perspective, people.
By the way, about those "905ers who use our roads, use our running water during the day, etc.?". You should get your facts straight. The exodus of jobs from the city to the 905 region has reversed traffic flows. As of 2001 more people from Toronto go to work in the 905 region than the other way around. I guess you should be sending some money to them for the use of their roads.
Traffic jams from 416 to 905.
http://www.thestar.com/News/article/232205
http://www.nohomebuyingtax.com/
They have also taken out an ad in <a href=http://http://communications.torontomls.net/gov_rel/news/2007/gr0707/pdf/Fight%20Home%20Buying%20Tax%20Ad.pdf>;The Star.</a>
Also, if the city has money it makes it an attractive place to live, hence property value will mature and it will encourage the real estate market.
Why was this even posted??? stupid article.
real estate agents, and idiot developers are the reason this city is in debt.
I notice everyone is still flogging Harris for what he did,
but they seem to conveniently forget about Martin and what he did to the provinces. If you want to sling mud, fine, but let's make sure that everyone gets their fair recognition for their efforts to this mess. Let us not forget Dalton McGuilty who is really responsible for sicking Miller on the taxpayers in the first place. What the hell was he thinking? Oh yeah, he wasn't!
You've got bankers? Much worse! You've got Miller!!
Talk about hands in your pockets!
For those who think Toronto needs extra tax for entertainment, booze, etc. Well, it's simple. I live in Pickering, why would I go see a movie in TO when we have fine theaters in Pickering-Ajax and Whitby? WAKE UP you bunch of Lefties. Stop protecting your ideology and have some common sense and sense of being efficient. He needs more money? WHERE DOES THE ACTUAL MONEY GO? If he's in a deficit, why is he giving himself a raise?
pure B.S.
Do people actually think live that?
If there was a way to campaign to kick him out of office - I would be one of the first on the list with my name.
I am from Belgium and too bad know English, tell me right I wrote the following sentence: "Traditionally, despite all this free example, buyers like it not slow to tax."
With love 8-), Tzvi.