TREB’s Victory

The delay of the vote on the land transfer and vehicle registration taxes may represent a defeat to Mayor Miller, but more than anything, it’s a victory for the Toronto Real Estate Board, who orchestrated a bombastic campaign against the former.

“Nobody likes taxes, but the public has been adamant that a second land transfer tax is not the right approach to addressing the City’s fiscal challenges because it could make the dream of home ownership more difficult to achieve for home buyers, while impacting
property values for some current home owners,” warned TREB president Donald Bentley in a July 5 press release.

This is, of course, misleading, in that the tax was not to be applicable to first-time homebuyers — i.e., those trying to achieve the “dream of home ownership”. Initially, there was a cap of $227,000 on the first-time buyers, who would pay only the tax on the value above that amount, but that cap was under review. However, it’s not really so compelling to talk about the “dream of larger home ownership”, now is it?

More from TREB: “Even though this tax will be paid by home buyers, current home owners understand that it could make their properties less marketable compared to homes in other municipalities where there is only one land transfer tax. This could hurt their property’s value, which would impact seniors the most because many of them rely on their property’s value to help with their retirement”.

Of course, other GTA municipalities around Toronto don’t all have lower property taxes, so such a move would be foolish in the long term. How this one-time, *2%* tax would lead property values to fall to the point that they would endanger any pensioner’s lifestyle, when leading economists predict a doubling in home prices in 2026 because of immigration (oft-cited by TREB itself as a reason the market will never, apparently, decline), is unclear.

TREB’s concern had nothing to do with a possible collapse of the real estate market. It had to do with a fear that, as the tax was absorbed, prices might adjust by 2% to accomodate it, affecting the commissions of TREB’s agent and broker members, who would either be forced to keep prices, and momentum, artificially aloft by cutting their commissions — generally higher than 2%, and serving the city as a whole in no obvious way — or allow the adjustment to take place and take home full commissions on slightly smaller prices.

I was interested to see if TREB would now take this opportunity to misinform the public about the coming property tax increases that are the result of its successful campaign — increases that will affect everyone who is enjoying that “dream of home ownership”. However, as TREB explains : “Property taxes can be paid monthly and, therefore, are more easily absorbed into home buyer’s budgets.” So just remember that when the assessment freeze comes off in 2008 and your 2005 assessment is updated and you pay your newly-increased property tax on your more valuable home, will you? And think of the seniors.