Anecdotes and Advice from a First Time Home Buyer Part 8 – Condos and Taxes

by Mike Holman

My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 7 – A Close Call.

Condo Show

After a dismal period of viewing unappealing and expensive properties, we decided to attend the Metro Toronto Condo Show just to gauge our options. It seemed like a good way to learn about the basics of a condo purchase. And admittedly, a new or near-new development is appealing in that it would be maintenance-free and likely decorated in our style.

If we hadn’t already been aware of the target demographic for many of the new condos, the Condo Show was attended mainly by early 20-somethings and to a lesser extent, retired empty nesters. The show added little to our knowledge as we had already done some research. There were only a few condo representatives on hand, and they had little hardcopy information. The free condo magazine was useful, but much of the information it contained was already online as well. The majority of exhibitors represented flooring, closet and furniture retailers.

What we were able to take away from the experience was that the newer buildings tended to have smaller units. The luxury condos offered larger units and a more mature crowd, but had heftier prices. On the whole, many of the more affordable buildings did not suit us in terms of their locations in the Entertainment District, along the Harbourfront or in Liberty Village. Buildings in the neighbourhoods we do like are not necessarily cheaper than a house. The main advantage is that condos are move-in ready. Older resale buildings do seem to offer larger units so may be the route we choose.

Municipal Land Transfer Tax

It was with great anxiety and inevitability that I read about the approval of the municipal land transfer tax on October 22, 2007. The tax will be levied on Toronto home buyers and is paid in addition to an Ontario Land Transfer Tax.

Just what are the implications of the new tax? It comes into effect on February 1, 2008 and will work on a sliding scale according to the purchase price. Therefore, a $500,000 home would be taxed at three different tax levels.

Home Purchase Price

Toronto Land Transfer Tax

up to $55,000


$55,001 to $400,000


over $400,000 (for one or two-family residential properties)


over $400,000 to $40 million

(commercial properties and multi-residential units)


over $40 million


The exceptions to the new tax are for homes purchased with a signed legal agreement by December 31, 2007 even if the closing date falls after February 1, 2008.

First-time home buyers receive a tax break by way of a $3,725 rebate for properties costing up to $400,000. The portion of the purchase price which exceeds $400,000 is still taxed at 2%. In effect, that means that first-time home buyers of properties costing less than $400,000 are exempt from the tax.

While conscious of the looming December 31, 2007 deadline, we are still at the mercy of market availability. After all, a house is too large a purchase to make rashly just to save some money.

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