If you are thinking about buying a house, now is a good time to get off the fence. If you buy before December 31st, you will save thousands in tax money!
On October 22, 2007 Toronto City Council approved the municipal land transfer tax that will be levied on top of the provincial land transfer tax. This additional tax goes into effect on February 1, 2008.
For residential properties:
- 0.5% of the amount of the purchase price up to and including $55,000.
- 1% of the amount of the purchase price between $55,000. - $400,000.
- 2% of the amount of the purchase price above $400,000.
If you buy a house worth $600,000, you will pay $7,725 extra in land transfer tax. A home purchase of $800,000. will be an additional $11,725!
Not bad savings for coming on time.
To avoid the new land transfer tax, you must have a contract signed by December 31, 2007 with a closing in 2008.
But if you miss the purchase now in December, you still have a chance in January - normally a slow month. If you buy before 31 January 2008 you must close on your home purchase before 1 February 2008. Pretty tough timing but substantial tax savings. If you prep your mortgage well, you will do fine.