City council approves luxury land transfer tax hike

City Council has approved a motion by Toronto mayor Olivia Chow to increase the land transfer tax on the sale of luxury homes over $3 million.

Tax from the luxury home market is projected to add $14 million in 2026 to the city’s bottom line. Tax from luxury home sales amounts to $138 million a year, according to the City.

The tax will start at 4.4 per cent for homes up to $4 million, 5.45 per cent for homes up to $5 million, 6.5 per cent for homes up to $10 million, 7.55 per cent for homes up to $20 million and 8.6 per cent for homes over $20 million.

Opponents to the mayor’s plan say taxing the rich has consequences.

“It’s not easy money because at the end of the day, the municipal land transfer tax is variable, depending on the number of transactions in the City of Toronto,” said Coun. and mayoral candidate Brad Bradford. “More importantly, this is another example of another tax on housing from the Chow administration and research from the CD Howe Institute, and others shows that every time you make housing more expensive, regardless of where it is on the income perspective, there are downstream impacts.”

Mayor Olivia Chow says she doesn’t see a downside to increasing taxes on wealthy homebuyers.

“No. Because it has an impact on half of one per cent of all Torontonians. These are the wealthiest two per cent of luxury property buyers,” said Chow. “When you can afford a home that’s $5-,$10-,$20 million …you can pay a bit more.”

On the other side of the political divide, assertions that this is the Canadian way.

“I think most Canadians would agree that progressive taxation is a cornerstone of our democracy. That’s how the income tax works. That’s how we make sure that people aren’t left behind,” said Coun. Gord Perks. “People who are doing very well have always paid a little bit more in Canada, and I think this is a fair way to make sure that those who need the most get the help they need.”

The Toronto Regional Real Estate Board is also among those who oppose the tax. They sent a letter to Premier Doug Ford asking him to step in and stop it, but Ford says he won’t do that, adding if people are upset, they can express themselves in next fall’s municipal election.

Among the amendments to the luxury tax motion is to have city staff look at providing some additional relief for first-time homebuyers, however, for now, that is just limited to a study, and if it does move forward, it won’t begin until future budget years.

As well, council will consider allocating all the revenue collected from the tax to go towards transit and housing benefits. They will also request that the Ford government provide the City a percentage of the HST to lessen their reliance on the municipal land transfer tax.

The city’s 2026 budget is set to be revealed in January, and the new land transfer tax would kick in in April.