Potential new tax could dampen real estate sales
By Jenn Watt
2015 was a strong year for the local housing market. Across Haliburton County, sales were up about 14 per cent year to date, with 25 per cent more cottage sales this year than last.
Real estate brokers are happy to see more people choosing to reside in the Highlands, but some worry that a potential new land transfer tax could slow that growth in the coming years.
The provincial government has indicated that it would like to give all municipalities the ability to impose a land transfer tax on top of the current provincial land transfer tax, essentially doubling it.
These funds would flow to the municipalities for their use.
Century 21 Granite Realty Group Ltd. broker of record Andrew Hodgson was thrilled with the housing sales this year. He takes the increases as an indication that baby boomers are picking the Highlands as their retirement destination and that new immigrants in the GTA are increasing demand and property values in the city, giving those who move some extra cash to spend here.
“We have what they are looking for: we have quality, we have privacy, great lakes, we have a beautiful community and lots and lots of people are starting to understand that,” he said.
Retirees in their 50s who choose the Highlands bring plenty of energy and money to the area, which enhances the community, he said.
Remax North Country Realty Inc. broker Lisa Mercer said sales have been up this year, but prices aren’t overinflated.
“This year we’ve seen phenomenal sales, just amazing,” she said.
Anthony vanLieshout, broker of record at Royal LePage Lakes of Haliburton, said he has seen the upswing in sales in the last four or five months. Asked to guess why sales are up, he ventured it could be a consequence of Toronto’s hot housing market.
“If we look at what’s happening in the GTA marketplace with the increase in price and high level of activity, I’d like to think that ripple effect is long overdue here,” he said.
Trophy Property broker of record Peter Brady said he is seeing lifestyle change move the market. Baby boomers with lakefront property are selling and moving into town, sometimes to condominiums, which frees up real estate for younger families to buy.
“Yes, I see this as a trend that will bring new money and new families into the area as they renovate and build new homes,” he said.
The prospect of an additional tax doesn’t sit well with any of them.
“The potential land transfer tax being added to property purchases effectively doubles the tax already being charged,” Brady said. “In a price sensitive area like Haliburton it could have a devastating impact on pricing and hence sales. Buyers will reduce their bid prices, in effect asking the sellers to pay the tax. Both prices and unit sales could languish.”
According to the Ontario Real Estate Association’s website made especially for this issue, DontTaxMyDream.ca, on a $300,000 home, provincial land transfer tax is $2,975. The municipal land transfer tax would be $2,725.
Local MPP Laurie Scott said the PCs are opposing the possible change. Leeds-Grenville MPP Steve Clark introduced a private members motion earlier this month asking representatives to vote on whether to allow municipalities to impose the additional tax. It will be voted on at the legislature on Dec. 3.
Scott said the additional taxation would hurt those in the middle class the most, since it is harder for them to come up with thousands of extra dollars when buying a home.
“It basically becomes more unaffordable to buy homes for a certain group of people,” she said. “It punishes those starting out and the middle class more so.”
The ability to impose the tax was already introduced to the city of Toronto in 2008 and some believe it is only fair to allow other municipal governments the same power.
County Warden and Dysart et al Reeve Murray Fearrey said he wasn’t in favour of new taxes on principle, and worried that giving municipalities this power could mean that the province is more likely to download the cost of more services to the local government.
Despite rising cost pressures, Fearrey said he hopes governments can find ways not to impose more taxes.
“There comes a point in time where you have to be fair, too,” he said. “I worry about somebody who’s trying to put together a down payment for a house and now all of a sudden they have to find another $2,500 or $3,000 and that’s the downside to it. It’s something we’ll have to struggle with.”
VanLieshout said even if the government does open up the possibility of imposing the tax, that doesn’t mean local governments will.
“There’s no guarantee that Dysart’s going to do that or any of the municipalities are going to do that. It’s just an option that’s available to them,” he said, adding that it is hard to predict whether additional taxes would necessarily deter home buyers.
Adopting or ignoring the new tax would need to be a countywide decision, Mercer said.
“I would be shocked if our local county did that because it would have to be on a county basis. You couldn’t have Minden Hills allowing a double tax and Dysart not allowing it, because then all of a sudden we’re going to be sending everyone up to Dysart to buy. It would have to be on a countywide basis and I don’t believe our local politicians want to see our county stagnate and that’s what’s going to happen [if the tax is adopted],” she said.
Hodgson suggested a new tax could be used in the county’s advantage. Assuming it is imposed by neighbouring municipalities, it would make buying in the Highlands the more affordable option.
“This will become a competitive advantage for us potentially,” he said, though he’d prefer the province chooses not to go ahead with the change.