WinnipegREALTORS® noticed a soft first-time buyers market last year in comparison to other Canadian major markets. Its documentation showed how local sales in the under $300,000 market fared poorer than in other markets such as Regina, Calgary and Edmonton.
In early 2009, WinnpegREALTORS® put forward a proposal to Greg Selinger, the then finance minister, to seize an opportunity to exempt first-time buyers from the very unfair land transfer tax, which can mean the difference in someone qualifying for a home in a desired neighbourhood.
But, the minister failed to make changes to the land transfer tax.
Fast forward to 2010 and a strong recommendation was made by WinnipegREALTORS® to Finance Minister Rosann Wowchuk in light of an observation about the 2009 housing market. Last year, first-time home buyer exemptions were offered in Ontario and B.C. on their land transfer taxes.
The land transfer tax is an additional closing cost to a buyer, which must be paid before a title can be transferred to them as the new registered owner of a property. Alberta has no land transfer tax while Saskatchewan has a more modest tax that collects $300 for every $100,000 in property value.
Manitoba has the highest land transfer tax rate in the country at two per cent, which applies to any property value amount over $200,000. With prices rising over the past few years, the majority of sales now are over $200,000, so a buyer has to come up with more up-front cash to cover closing costs.
For every $50,000 in value above $200,000, a home buyer owes the province another $1,000.
Prior to the release of the provincial budget, there were some increases noted in land titles fees. At first, it was thought the registration fee for transfer of a title for a property was increasing 71 per cent from $70 to $120.
As it turned out, it was for pre-examination of a subdivision plan prior to registration. Nevertheless, it is important to note home buyers pay a registration fee of $70 to the province for title registration in addition to the land transfer tax.
This year’s provincial budget failed to address the unfairness of the land transfer tax to home buyers. Home buyers who become homeowners this year will not receive the additional $50 education property tax credit earmarked for 2010.
WinnipegREALTORS® feels there is a need to create more awareness of the land transfer tax issue and as such has created a dedicated website — www.2muchltt.com. It not only offers extensive information on the tax, but includes a detailed question-and-answer section, and allows the public to easily contact their MLA to express any concerns they have with the tax. WinnipegREALTORS® also welcomes feedback on this issue.
The following are the top-10 reasons WinnipegREALTORS® feels the province should be offering a first-time home buyer exemption on the land transfer tax:
1. It levels the playing field with other provinces and positions Manitoba for further growth.
2. It puts new buyers into the marketplace thus creating more home sales. Each sale creates ancillary spending of $40,000.
3. It will help keep the real estate market stable in a tougher economic environment where there are more stringent mortgage qualification requirements and higher interest rates.
4. It will make housing more affordable.
5. It will free up very scarce rental accommodation.
6. It will spur new home construction.
7. It will keep people working while stimulating the economy. It is cheaper to keep people working than to create new jobs.
8. It will help maintain consumer confidence in difficult times.
9. It will show that the government is sensitive to the challenges first-time buyers face in meeting down payment and closing costs.
10. It will not prejudice other investments over housing — a most basic shelter need.