The Liberal government recently announced a new housing rebate available to first time home buyers in the Province of Ontario. The government hopes to boost the housing market in unstable areas of the province without risking the stability of others. Offering a new rebate on housing can often be the injection of relief the housing market needs, but the rules can be a bit confusing, especially for those not well versed in the area of real estate. In order to provide a bit of clarification, here are the answers to the top three questions about the new housing tax rebate in Toronto, Ontario.
Question #1: When Does It Take Effect?
The most frequently asked question is, unsurprisingly, when does the rebate take effect. For many people active in the real estate market, including agents, buyers, lawyers and accountants, knowing when this new rebate will apply can have a major impact on the timing of offers and acceptances. The Liberal government has stated that the rebate will become effective for those homes purchased on or after January 1, 2017. The goal is to help first time home buyers attain ownership in that calendar year, hopefully boosting the market across Ontario.
Question #2: Exactly How Much Is It?
This housing tax rebate is in the form of a Land Transfer Tax rebate. This new housing rebate doubles the maximum about of the rebate available, from $2,000 to $4,000. In practice, this means that first time homebuyers who meet the other eligibility criteria, including age and residency restrictions, pay zero Land Transfer Tax on homes valued under $368,000. For homes priced above that amount, the Land Transfer Tax would only be payable on the amount over $368,000. It’s important to note that this new rebate is available in connection with other forms of government assistance for first time home buyers, including tax-free RRSP withdrawals and the first-time homebuyer’s tax credit.
Question #3: What About My Rental Property?
A question that has come up in connection with this new housing rebate deals with the taxation of apartment buildings in the province. In conjunction with the Land Transfer Tax announcement, the Liberal government also announced that there would be a temporary freeze on property tax associated with apartment buildings. The government hopes that this will help rental rates stabilize across the province, leading the way to home ownership for renters as well.
To learn more about the new housing tax rebate in Toronto, Ontario contact The Taxperts Group.
