On September 6, 2023, the City of Toronto approved increased graduated Municipal Land Transfer Tax (the "MLTT") rates for residential properties valued in excess of $3,000,000.00 to assist with the reduction of Toronto's budget deficit. There will be additional graduated rate margins for high value residential properties containing at least one, and not more than two, single family residences. Condominium units will also be affected. These new rates will come into effect on January 1, 2024.
The following are the current rates:
| Value of Consideration | MLTT Rate |
|---|---|
| Up to and including $55,000.00 | 0.5% |
| $55,000.01 to $250,000.00 | 1.0% |
| $250,000.01 to $400,000.00 | 1.5% |
| $400,000.01 to $2,000,000.00 | 2.0% |
| Over $2,000,000.00 | 2.5% |
On January 1, 2024, the following additional rate margins will be added:
| Value of Consideration | MLTT Rate |
|---|---|
| Over $3,000,000 and up to $4,000,000 | 3.5% |
| Over $4,000,000 and up to $5,000,000 | 4.5% |
| Over $5,000,000 and up to $10,000,000 | 5.5% |
| Over $10,000,000 and up to $20,000,000 | 6.5% |
| Over $20,000,000.00 | 7.5% |
The MLTT is payable in addition to the Ontario Land Transfer Tax (the "LTT").
The increases in the MLTT will significantly impact the cost of purchasing real property in the City of Toronto, as illustrated in the examples below:
| Residential Land Value | LTT | MLTT | Total Land Transfer Tax as of Jan 1, 2024 | Total Land Transfer Tax prior to Jan 1, 2024 |
|---|---|---|---|---|
| $3,000,000 | $61,475 | $61,475 | $122,950 | $122,950 |
| $10,000,000 | $236,475 | $416,475 | $652,950 | $472,950 |
| $15,000,000 | $361,475 | $741,475 | $1,102,950 | $722,950 |
| $25,000,000 | $611,475 | $1,441,475 | $2,052,950 | $1,222,950 |
This MLTT rate increase may impact demand in the luxury home market which may deter the construction and development of luxury homes, and the redevelopment of in-fill sites. For example, properties with old homes situated on lots appropriate for an in-fill land consolidation for future townhomes may be impacted by the MLTT rate increase as well. Although these old homes would not be considered "luxury" homes, they would be subject to the MLTT rate increase if their value exceeds $3,000,000.00.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.