The Ontario government is moving to double the maximum tax rebate offered to first-time home-buyers while boosting the land-transfer tax on house purchases above $2 million.
Finance Minister Charles Sousa made the announcements in his fall economic statement, delivered in the provincial legislature on Monday afternoon. The changes are to take effect on Jan.1, 2017.
First-time homebuyers across Ontario will become eligible for a rebate of up to $4,000 in provincial land transfer tax, levied on the purchase of every house and condominium. Meanwhile, the land-transfer tax rate on the amount of a purchase above $2 million will rise to 2.5 per cent, from the current rate of 2 per cent.
Government officials say the tax increase on luxury homes will bring in about $105 million annually, and that will fund the increased rebate.
The government revealed Monday how the rising cost of housing is significantly boosting its tax revenue. Its land transfer tax revenue is up 15 per cent from its forecast in the budget delivered in February.
The province is now expecting to take in $2.36 billion in land-transfer tax this fiscal year, $314 million more than predicted. The economic update documents say this is “due to the continued strength of Ontario’s housing market in 2016.”
Sousa had promised last week that today’s statement would include measures to address housing affordability. But Premier Kathleen Wynne moved quickly to dampen expectations, saying the measures would amount to “a small change” to help first-time home-buyers.
Sousa reaffirmed his forecast that the current 2016-17 deficit will be $4.3 billion, and repeated that he plans to bring in a balanced budget in 2017-18. If so, it will be the province’s first time without a deficit in a decade.
Other new measures announced in the economic statement include:
- $140 million more spending in the hospital budget to “reduce wait times and improve services.”
- $65.5 million more to be spent this school year to create 3,400 extra child care spaces.
- A new financial services regulatory authority that the government says will “improve protections” for consumers, investors and pension plan beneficiaries.
By Mike Crawley, CBC News Posted: Nov 14, 2016 1:17 PM ET Last Updated: Nov 14, 2016 2:28 PM ET