The Impact of the new Toronto Land Transfer Tax, from the C.D. Howe Institute 1. In early 2008 Toronto City Hall implemented a Land Transfer Tax (LTT) of approximately 1.1%. Buyers pay this tax when they purchase a house in Toronto. 2. The C.D. Howe Institute looked at the sales of single-family houses between January 2006 and August 2008. They restricted their investigation to houses near the border of other municipalities to compare the effects of the LTT. 3. Within the first year that the LTT was imposed, it caused a 16% decline in the amount of houses sold in Toronto. 4. It is estimated that the Toronto Land Transfer Tax was responsible for a reduction in sales of 3,500 houses it its first year. 5. For every $13 in LTT collected and additional $1 in administrative expenses is generated = 7.7% increase. 6. The LTT may be responsible for an average 1.5% decline in value of a single family home in Toronto. This translates to an average reduction of $6,397 in the sale price of a single family home in Toronto. 7. The LTT is a disincentive for moving. This forces people to remain in houses that are: not in a desired location, too big, too small or too expensive. 8. The LTT is a regressive tax because it relies on a very small tax base. An 8% - 10% increase in property tax would raise the same amount as the LTT. 9. The LTT has led to an increase in administrative costs. If filing a sale electronically one requires proprietary Teranet software ($525 per user) and a filing fee of between $10 to $20. The infrastructure for collecting property taxes is already in place. 10. Because the Toronto LTT has caused a reduction in sale prices, the resulting loss in Provincial LTT revenue is estimated at $25,000,000. One can safely assume that this loss will be recaptured by the Province in higher or new taxes which may impact all Ontario residence. Clive Levitt | 
COMMERCIAL ADVISORS INC.