Tax Relief Coming for First Time Homebuyers
Affording a home purchase is a little easier for first-time homebuyers. The Liberal government announced it will refund up to $4,000 from the land-transfer tax for qualified residential buyers.
To offset the income loss, the government is raising the land transfer tax 0.5 per cent on certain market segments, such as high-end buyers. Any home price over $2-million will have a tax rate of 2.5 per cent and the rate on non-home properties like commercial units over $400,000 will rise to 2 percent. This incremental increase is projected to net $105 million a year in tax revenue.
Right now first-time homebuyers are eligible for up to a $2,000 tax refund. The new measure doubles the potential refund for the first $368,000 of a home’s purchase price for qualified first time buyers. The relief is restricted to Canadian citizens and permanent residents. Foreign investors will not be able to take advantage of the refund.
Finance Minister Charles Sousa told reports after speaking to the legislature, “We’re trying to tell the rest of the world that Ontario’s open, that we want to attract more investment.”
All of Ontario including Ottawa will benefit from the measure that takes effect on the first day of the New Year. The land transfer tax relief is another step in a series measures recently passed to address runaway real estate markets in Vancouver and Toronto. Earlier this year the federal government announced new rules regarding mortgage lending and mortgage insurance.
Critics doubt that the 100 per cent increase in tax relief will spur more first-time home purchases. The tax relief does little to address issues surrounding home affordability.
Luckily, Ottawa remains ranked on the best cities in Canada for its lifestyle and home affordability. The Hooper Home Team helps buyers squeezed out of housing in the major cities find an attractive home at a reasonable price. Contact us today start an Ottawa home search.