Toronto considering new homeowners tax to curb skyrocketing home prices

Toronto City Council will consider asking the provincial government to introduce a new tax for homeowners during its meeting this week in an attempt to curb skyrocketing home prices.

A motion brought forward by Councillor Mike Colle requests that the Government of Ontario help to stop out-of-control housing prices by imposing a “home speculation and home flipping” tax. The motion does not outline details on how much the tax would be, who it would be applied to, or how and when it would be collected.

“Given the out of control, hyper escalation of home prices in Toronto, making housing affordability impossible for most Torontonians, and given that these out of control housing prices are fueled by real estate speculators and home flippers (‘investors’) who are buying multiple properties other than their primary residence, it’s time for the Ontario Government to stop out-of-control housing prices by re-imposing a Land Speculation Tax to stop home speculators from unfairly driving up the cost of housing in Toronto to unprecedented levels,” the motion reads.

This wouldn’t be the first home speculation tax that Ontario has seen if imposed. In 1974, the province introduced a 50% land speculation tax on the profits of home sales that were not principal residences or family-owned farmlands. The tax was later decreased to 20% and then scrapped altogether after it caused the market to stall as multi-property owners saw their equity drop.

Limited housing supply has been a major problem in Ontario and is one of the driving forces behind the ever-increasing home prices. And according to an October 2021 report, multi-property owners accounted for over 25% of all real estate transactions — more than either first-home homebuyers (22%) or those who were moving houses (16%).

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Toronto Regional Real Estate Board President Kevin Crigger wrote a letter to Council addressing the motion. Crigger encouraged Council to “exercise caution” when considering the tax.

“While TRREB appreciates the desire to address housing affordability challenges in Toronto, we urge the Executive Committee and City Council to be cautious with any potential consideration of a ‘Home Speculation Tax’ as this could primarily impact small-scale “mom and pop” investors who also happen to be a key source of supply for an already tight rental market,” Crigger wrote. “This would be on top of an existing substantial federal capital gains tax on these properties.”

Toronto City Council cannot implement a home speculation tax on its own and would require the provincial government to pass such legislation.