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Did the Land Transfer Tax Reduce Housing Sales in Toronto?

Author

Listed:
  • Murtaza Haider

    (Ryerson University)

  • Amar Anwar

    (Cape Breton University)

  • Cynthia Holmes

    (Ryerson University)

Abstract

The City of Toronto implemented a land transfer tax on real estate transactions in February 2008. We explore the impact of the tax on housing sales in the City of Toronto and the rest of the Greater Toronto Area (GTA). Previous research has shown that housing sales declined in Toronto once the City imposed the land transfer tax. This study, however, concludes that the negative impact of the tax on housing sales was statistically insignificant. Our approach differs from earlier studies in three ways. First, we highlight other influences on housing sales, in particular, the impact of the Great Recession, which overlapped with the imposition of the land transfer tax in Toronto, and the tightening of mortgage regulations in Canada that prevented lenders from issuing subprime mortgages. Second, we analyze the sale of both freehold and condominium properties in the GTA; previous research restricted analysis to freehold properties. Third, we take a regional perspective by contrasting any decline in housing sales in Toronto against an increase in sales in the suburban municipalities.

Suggested Citation

  • Murtaza Haider & Amar Anwar & Cynthia Holmes, 2016. "Did the Land Transfer Tax Reduce Housing Sales in Toronto?," IMFG Papers 28, University of Toronto, Institute on Municipal Finance and Governance.
    • Handle: RePEc:mfg:wpaper:28
    as

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    File URL: https://tspace.library.utoronto.ca/bitstream/1807/81207/1/imfg_paper_28_haider_anwar_holmes_july_28_2016.pdf
    File Function: First version, 2016
    Download Restriction: no
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    Cited by:

    1. Zack Taylor & Alec Dobson, 2020. "Power and Purpose:Canadian Municipal Law in Transition," IMFG Papers 47, University of Toronto, Institute on Municipal Finance and Governance.
    2. Néstor Garza, 2019. "Spatial and Dynamic Features of Land Value Capture: A Case Study from Bogotá, Colombia," Public Finance Review, , vol. 47(3), pages 603-622, May.
    3. Bev Dahlby & Braeden Larson, 2019. "Should Alberta Adopt a Land Transfer Tax?," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(5), February.

    More about this item

    Keywords

    land transfer tax; housing sales; housing market; consumer behavior; Toronto; Greater Toronto Area;
    All these keywords.

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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