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Land Transfer Tax Refund for first-time homebuyers is a small change

Instead of implementing grand-sweeping changes in the hot housing market, Ontario will commit to helping first-time homebuyers who are struggling voraciously to purchase homes in Toronto.

Ontario will double the maximum Land Transfer Tax Refund to $4,000 for eligible first-time homebuyers as of January 1, 2017. This means there would be no Land Transfer Tax on the first $368,000 paid for a first-time home. This will help people who were unable to purchase a home due to rising property costs and taxes.

Along with lowering the rates for first-time homebuyers, Ontario has decided to raise the rates of one- or two-bedroom single-family residences over $2 million to 2.5 per cent. This would mean that home buyers in the over $2 million market would pay an extra $5000 on average, which is affordable for the many buyers in the upper echelon. The funds raised from the rate increases would be used to fund the first-time homebuyer’s initiative. The refund was announced as a part of the 2016 Ontario Economic Outlook and Fiscal Review.

The Land Transfer Tax Refund has been met with mixed reviews, many citing it as a soft approach to a larger issue. The housing market in Toronto has been in the hot zone for several months and creating more opportunities for first-time buyers does little to cool the market in the larger metropolitan centre. Though Vancouver’s foreign buyer’s incentive was a bit high-handed, the Land Transfer Tax Refund is the complete opposite and accomplishes very little.

The Land Transfer Tax will benefit first-time homeowners outside of Toronto due to inflated prices within the city boundaries. The average price for first-time homes outside of Greater Vancouver and Toronto is $361,000. Alternatively in Toronto, prices were 19 per cent higher than last year’s.

Though the refund will do little to help the heated markets in Toronto, any little bit to aid first-time homebuyers to compete in Toronto’s housing market is welcome. Even if the homebuyer will spend more than $365,000 to purchase in the city, a rebate on the Land Transfer Tax will help homeowners to save money initially and use it to keep up with hefty mortgage payments thereafter.

Helping first-time homebuyers and increasing taxes for wealthier homeowners is a smart move, but broader strokes from Ontario may be the only way to cool the Toronto housing market. Providing affordable housing and hitting density targets is also an important step, like looking into zoning bylaws at a municipal level and allowing for laneway housing. Housing is one of the most difficult files in Ontario’s fiscal review and the housing sector awaits with bated breath what future options the ministry considers.

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Ontario leading the way with new Electric Vehicles incentive

Once a distant dream on the horizon, Electric Vehicles (EV) are becoming a realistic purchase for buyers due to increased incentives by the province of Ontario.

Ontario is leading the way for electric cars, with their revamp of the modernized Electric Vehicle (EV) Incentive program. The $20 million budget for the program is a part of Ontario’s Green Investment Fund, which has dedicated $325 million to help mitigate climate change.

The purchase rebate of an Electric Vehicle has been increased from a $5000 to $8000 rebate to a $6000 to $10,000 rebate. The owners of the EV’s will also have an opportunity to receive an additional $3000 if they have a vehicle with a larger battery capacity, and additional incentives will be offered to EVs that have more than five kilowatt-hours on their batteries. An additional $5000 will be provided for vehicles with more than five seats.

There are about 5,800 EVs driving along Ontario’s roads and the updated budget is bound to raise these numbers. Dedication to climate change programs such as the Electric Vehicles incentive is imperative for Ontario to reach its greenhouse gas 80 per cent gas reduction target by 2050.

“With a growing population and expanding urban regions, transportation emissions pose one of our province’s greatest challenges in achieving our ambitious greenhouse gas pollution reduction targets,” said Premier of Ontario, Kathleen Wynne in a statement. “By making it easier for people to switch to an electric vehicle, we are taking an important step in our fight against climate change.”

Globally, Ontario is leading the way in EV incentives, providing one of the highest rebates worldwide. In the United States, a maximum $7,500 incentive is being offered for all-electric and plug-in hybrids purchased after 2010 in the form of a tax credit. In Ireland, EVs are provided tax relief up to € 5,000. Plug-in cars are eligible for € 2,500. In Sweden, the one-time “super green car premium” of 4,500 Euros is offered, but will only be provided to 5000 electric vehicles.

The $20 million Ontario investment will go towards creating a network of fast-charging stations across the province. The Ministry of Transportation (MTO) has implemented the Electric Vehicle Chargers Ontario program (EVCO), a competitive application-based grant program for public and private sector businesses to encourage investment. There is no cap on the amount of funding a company can request, which means there is potential for the cost of a charging station to be covered in it’s entirety, creating financial motivation for larger businesses. The application closes on Feb. 12.

Ontario Minister of Transportation, Steven Del Duca, is looking forward to the increased funding for these programs. “Providing better incentives for electric vehicles will help consumers and businesses make the transition to more sustainable vehicles, and keeps Ontario at the forefront of the clean, green economy,” he said.

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