Toronto budget chief Frank Di Giorgio wants to eliminate the rebate given to first-time homebuyers, and instead reduce the land-transfer tax rate for all homebuyers.
Mr. Di Giorgio tabled a motion in budget committee Friday, which, if passed, would see the land-transfer tax rate for the first $250,000 of a home reduced from 1 per cent to 0.1 per cent . This would cost the city between $18-million and $20-million dollars, he said.
That cost would be offset in part, he said, by either eliminating or reducing the rebate given to first-time homebuyers. Currently, first-time homebuyers are eligible for a rebate of up to $3,725. “We’re giving that credit to the second and third-time home buyer who normally wouldn’t have that credit,” he said.
Mr. Di Giorgio added that the city is currently budgeting to receive $335-million in 2014, when in actual fact it’s on target for about about $350-million in land transfer revenue. That extra $15-million, he said, would also offset the cost.
He added that lowering the tax might “stimulate some activity in the market. So, if you get a lot more repeat sales than you did before, you’re going to get more land transfer tax coming in.” He said that, if the cost is not adequately offset, he would be open to looking at increasing the property tax rate the following year.
But city manager Joe Pennachetti was cautious about Mr. Giorgio’s motion assuming that the city will receive $350-million in land transfer revenue. “We’re recommending $335-million, and believe you should leave that number,” he said.
Councillor Doug Ford, who serves as vice-chair of the budget committee, said he’s in favour of reducing the land-transfer tax. But he said he plans on speaking with Mr. Di Giorgio about concerns he has about eliminating the first-time homebuyer rebate. “I’m in favour of supporting first-time homebuyers,” he said.
Mr. Di Giorgio acknowledged that he doesn’t like his odds of getting the motion passed. It still has to be voted on by budget committee in the beginning of January, then the rest of council at the end of the month. “I’m gonna make the best pitch I can,” he said. “But at the end of the day, it’s up to how other people feel.”