A recent study by the C.D. Howe Institute, released October 11, found that the Toronto land transfer tax (LTT) drove down real estate sales in the city by 16% since 2008 when the tax was first implemented. The report named Stuck in Place: The Effect of Land Transfer Taxes on Housing Transactions focuses on measuring the long-term impact of the tax by comparing Toronto to other nearby markets that are not subject to the tax. Take a look at the full report here.
Findings suggest that residents subject to LTT tend to opt for renovations as opposed to moving to a new place even when relocating would be more convenient. As noted in the report, this might force people “living in ill-suited homes for longer than they would have otherwise desired.” This trend was especially noticeable in areas with resale prices below the median market sale price.
Toronto is the only municipality in Ontario that has the authority to levy the LTT in addition to the provincial LTT. The report recommends the city limit itself to its other revenue-raising tools and the province replace its LTT with revenue from value-added taxes.