As a realtor who has worked with many first-time homebuyers over more than three decades in real estate, I’m happy to share good news for first-time buyers announced Nov. 14 by Ontario Finance Minister Charles Sousa.
Starting Jan. 1, 2017, the provincial government will double the existing land-transfer tax rebate for first-time buyers, from $2,000 to $4,000. Charles Sousa made the announcement as part of the Liberal Government’s fall economic statement.
“Purchasing your very first home is one of the most exciting decisions in a young person’s life, but many are worried about how they will be able to afford their first condo or house,” Charles Sousa said in his announcement.
“The government recognizes that it is an increasingly challenging time to enter the housing market, especially for young families.”
The increase in the rebate means that if you are a first-time homebuyer, you will not have to pay land-transfer tax on the first $386,000 of the cost of your property.
That’s good news for buyers in Ottawa, where home prices are considerably more reasonable than they are in cities like Toronto and Vancouver.
In our market, the Ottawa Real Estate Board reported that the average sale price of a residential property that sold in our area in October was $392,579. The average price of a condominium property was $251,465.
Let’s use that average home sale price of $392,579 to give you an example of the new rebate: According to the tax calculator on the Ottawa Real Estate Board website, the land transfer tax for a home at that price would be $4,364.
With the $4,000 rebate, first-time buyers would be left paying just $364 in land transfer tax. Previously, you would have received a $2,000 rebate on that amount, leaving you to pay $2,364.
Many first-time buyers are surprised to learn about the many extra expenses that they will have to budget for, outside of their downpayment. These changes will reduce or eliminate one of those expenses. As first-time buyers can attest, every little saving helps in reducing costs.
In a background paper on the Ministry of Finance website, the provincial government says the expanded amount of the refund means that “more than half of first-time buyers in Ontario will pay no land transfer tax on the purchase of their first home.
“The housing market is an important source of economic growth and employment in Ontario and improving housing affordability will help more Ontarians participate.”
The good news for first-time buyers also means a slight extra cost for those purchasing properties at the higher end of the market, costing more than $2 million. The province will be funding the rebates partly by increasing the land transfer taxes on houses in that price range.
For every dollar above $2 million, the province will increase the rate from 2 per cent to 2.5 per cent. But that is only for the amount that is above $2 million. The land transfer tax on the amounts up to $2 million will remain unchanged.
The government says these changes will only affect properties that include one or two single-family residences.
If you are purchasing another kind of property, such as an apartment building, there will be an increase, but only on the part of the price above $400,000. That will increase from 1.5 per cent to 2 per cent.
The government also offered a reminder of other coming changes that will interest homeowners. The government will help trim bills by waiving the 8 per cent provincial share of the HST on electricity bills starting in January.
The government said it also plans to ban door-to-door sales of furnaces, water filters and air conditioners, and will pass legislation that will set new qualifications for home inspectors, in an effort to standardize the home inspection sector. Some homeowners in recent years have complained of the pressure tactics they’ve encountered from door-to-door salespeople trying to convince them to sign contracts.
If you’re interested in buying or selling property in the Ottawa area, I’d love to chat with you about the Ottawa market and let you know about the services you will receive from Nancy Benson and Associates. You can reach me through my website, at nancybenson.com, or give me a call at 613-747-4747.
You can read more about the Ontario government’s efforts to help with housing affordability, on the Ministry of Finance website.