Taken from cbc.ca Monday November 5, 2007...
Toronto's controversial new land transfer tax is creating a bidding war in some sections of the housing market.
The city-imposed fee could be as high as two per cent of the sale price, adding thousands of dollars to the final cost.
Purchasers have until the end of December to buy a home to be exempt from the tax, or until Feb. 1, to close in order to avoid the increased fee. All sales made to first-time buyers are also exempt.
Real estate agents say many people are trying to buy, or sell their homes, before the new tax comes into effect.
"They're trying to get on with their dream," said real estate agent Harvey Cooper, describing the people he's been dealing with over the past few weeks. "They're now confronted with having to do so in a more feverish, urgent kind of format."
Cooper says many homeowners are rushing to get their houses ready to sell - and the rush to buy and sell is driving prices up.
Jonathan Winberg, a renovator who buys properties, refurbishes them, then re-sells them after increasing the value by hundreds of thousands of dollars, says he stands to take a big hit from the recently passed land-transfer tax.
"It's a huge impact and I don't know who's going to eat that cost," said Winberg "[Is it] coming out of my profit, or if I can pass that on because it is so new to the customers they are going to have their eyes on it.
"I don't think they are going to want to spend the extra money. It's like doubling the real estate fee." Winberg agrees with Cooper that the rush to get sales in before the tax takes effect is creating a bidding war, driving housing prices way up.
The land transfer tax will apply to all property purchases and will amount to between one per cent and two per cent of the purchase price. Later in the year a $60 per vehicle tax will come into effect.
The two taxes, combined, will raise about $175 million next year. In subsequent years they're estimated to bring in about $300 million.
The taxes are part of a strategy to resolve the city's budget shortfall which is estimated to be nearing $500 million.