It has just gotten a little pricier to own a home in Toronto – city council has approved increasing property taxes to 3.29% in efforts to bolster the stretched municipal budget. It’s estimated the hike will cost an extra $90 annually for the “average” homeowner: $69 per year based on a property with an assessed value of $587,471, plus a number of levies (including for the Scarborough subway project and City Building Fund, which focuses on transit and housing).
Mayor John Tory called the increase, which passed with a council vote of 35 – 8 “fair and affordable”, though it was a point of contention within council, as councillor Giorgio Mammoliti called for an all-out property tax freeze, and council Gord Perks insisted taxes be raised to 4.26% – motions that were both promptly voted down.
Calls for Province to Split the Bill
There have also been increased calls on the province to foot more of the city’s housing and infrastructure bill, as Tory stated to council, “We should not have the responsibility for housing – at least not the financial responsibility,” adding that if the city must spend on housing, both the provincial and federal governments should pitch in with the cost.
That the province recently blocked a proposal to toll drivers on the Gardiner Expressway and Don Valley Parkway – both heavily utilized by 905 commuters – has also been critiqued as putting additional tax strain on locals.
Cost of City Living is Rising
While property tax increases are never warmly received, they’re an integral part of living in a city like Toronto, says Zoocasa CEO Lauren Haw, who points out the city’s property taxes are comparable to those in the suburbs. “The reality is, the demands placed on the city from a growing population mean that transit and infrastructure needs must be addressed,” she says. “The modest property tax increase is understandable as city dwellers enjoy some of the lowest property taxes in the province, which have been kept under the rate of inflation for the last decade.”
However, the increase could disproportionately strain some owners whose homes have experienced rapid Toronto real estate price appreciation. “While higher property taxes won’t make or break affordability for the average home buyer, it may impact those who have been living long term in homes that have seen significant value increases – the owners’ incomes haven’t necessarily kept pace,” she adds.
Detached houses for sale within the city proper regularly command bidding wars, with some fetching hundreds of thousands more than the listing price (take for example this post-war Don Mills home that went for more than a million over asking).
January numbers from the Toronto Real Estate Board reveal the average home and average detached house in the City of Toronto cost $727,928 and $1,336,640 respectively, and a recent report from housing agency Teranet finds the average house price index has doubled in in the Toronto region since 2005.
MLTT Supports City Budget
What city council did not bring to the table during these budget talks was the recently discussed possibility of harmonizing municipal land transfer taxes (MLTT) with provincial rates. Toronto is the only city in the country where homebuyers must pay land transfer tax at both the provincial and municipal level – a move much derided by TREB. However, City Manager Peter Wallace pointed out that the budget remains heavily dependent on the collection of “volatile” MLTT, the proceeds of which have surged in recent years alongside housing prices.