The City of Toronto is implementing a new Municipal Land Transfer Tax (MLTT) rates of up to 7.5% on high-value homes and increasing the Vacant Home Tax from 1% to 3%.

The moves are an attempt by the City to increase housing-related revenue streams as it attempts to make up its funding shortfall. 

The new graduated Municipal Land Transfer Tax (also referred to as the "Mansion Tax" or "Luxury Tax") was established for residential properties valued at $3M and above. A 3.5% tax will be applied to homes up to $4M, a 4.5% tax on homes up to $5M, a 5.5% tax on homes up to $10M, a 6.5% tax on homes up to $20M, and, finally, homes over $20M would be hit with a 7.5% tax. 

Here is how it would shake out for a $12M dollar house. A tax of vaule between 3-4M$ is 3.5% which equals 35,000$. The amount between 4-5M$ is taxed at 4.5% which equals 45,000$. The amount between 5-10M$ is taxed at 5.5% or, 275,000$. And the 2M$ above the 10M$ mark is taxed at 6.5% or 650,000$. Total added tax = 1,005,000$.

Ouch! 

Who would this affect? Take a look at these listings over 10M$ and see how the other half lives!

The new MLTT rates are payable by a purchaser when they register their new property. The new rates come into effect on January 1, 2024. 

On October 11, 2023 Toronto City Council voted to increase the Vacant Home Tax rate from 1% to 3%. Toronto's move follows in the steps of Vancouver, which raised its Empty Homes Tax to 3% in 2021. 

According to Mayor Olivia Chow, the increase of the Vacant Home Tax rate is meant to target speculators.

"We're seeing speculators sitting on much needed housing, strangling the market, driving the price of rental housing higher and making it even less affordable for people," says Chow. 

Council also requested reports on introducing a foreign buyer land transfer tax, an emissions performance charge for buildings, and an additional land transfer tax on buyers who owns more than one property within Toronto. 

"The people of Toronto deserve a city where they can find affordable housing," says Toronto Mayor Olivia Chow. "Toronto is stepping up to meet our significant financial challenges and deliver the services people need. Despite the multiple actions approved by Council today we still need our partners – the Government of Canada and the Province of Ontario – to step up for the people of Toronto.” 

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