First time buyers – you’ve been kicked around! Most of you have scrimped and saved, gave up your morning latte for the lousy free coffee from the office coffee machine. You have stayed in Toronto all winter while your friends post photos of tropical adventures and cocktail-filled beaches. The whole time you spend building up your down payment, it feels like you can’t even keep pace with the rising prices of Toronto properties. Yes, you have suffered… But now, for once, you are getting a break!

How does this break for first time buyers work? Well, when you purchase a property you still must pay Toronto land transfer taxes and Ontario Land transfer tax.

If you are a first time buyer, you are forgiven a portion of that land transfer tax. Now, Ontario will be doubling the amount that first time buyer could have as a rebate, up to $4000. So, there will be many first time buyers who will not pay any Ontario land transfer tax at all.

Keep in mind, that you may still have to pay a portion of the Toronto land transfer tax.

But why would this break be coming to you? Well, it’s mostly to secure you vote for the provincial Liberals in the future, but maybe some government official felt you needed a break too. The Liberals have been promising to address affordability in Toronto. This is their way of doing it. I’m not sure the effects will change the real estate market very much. Still, it is a break at a time when first-time buyers have the bulk of their money going toward the down payment. So, it’s a positive thing.

It’s not such a positive thing if you are planning on buying or selling property over 2 million because you will be picking up the slack in land transfer taxes that the first-time buyers get a break on. So, if you are paying over 2 million for a house, then this would be considered a “luxury” property and these properties will see an increase in the percentage paid out in land transfer taxes. Properties over the $2 million threshold represent less than 1% of sales.

So, this won’t be a problem for many of us, but over time, the 2 million dollar mark may not be so luxurious. In the year 2030, that may be the average price for a house in this city. And if that’s the case, there will be more and more people affected by the higher end of this equation.

To be honest, I think it’s a deserved break for first time buyers, but I am a little concerned about the governments involvement in real estate. They often have good intentions, but their policies really have unforeseen consequences. Though I understand why they would need to have more tax revenues, I do think the Toronto land transfer tax has a way of keeping inventory low because few people wants to pay the high cost of land transfer tax when they sell So, they stay put. In turn, there is lower inventory and prices go up. But let’s end this on a positive note. Congratulations first-time buyers! Life just got a little sweeter.