While Premier Greg Selinger may not know for sure what the province stands to gain from income tax filings from the Winnipeg franchise NHL players, one thing he does know for certain is that when they purchase a home or condominium, there will be some sizable revenues coming into Manitoba’s coffers. The new revenue that is projected to fill the province’s treasury will come as a result of Manitoba having the highest land transfer tax (LTT) rate in the country, which starts at the lowest price level in the land of $200,000.
Local media have written articles projecting that NHL players will probably purchase luxury homes of over $500,000. At the $500,000 purchase price, the LTT tax brings in $7,650, plus $70 for registering a new title. Multiply this purchase price by 15 new players and an additional $114,750 in land transfer tax revenue is generated for the province.
While the NHL players are able to afford the LTT, other home purchasers are having difficulty coming up with the additional closing cost. This is borne out by statistics from WinnipegREALTORS®, which show a drop-off in first-time home buyers in comparison to other markets across the country where there isn’t a land transfer tax or there exists an exemption for first-time buyers.
WinnipegREALTORS® and the Manitoba Real Estate Association are joining forces to bring public attention to the unfair LTT.
A new television commercial produced by City TV is scheduled to run this summer and in September just prior to the October 4 provincial election. The commercial will be unveiled on a dedicated LTT campaign Facebook page. Check it out by going to the Facebook page entitled Manitoba’s Land Transfer Tax is Too Much.
We strongly encourage you to “like” the page. The more Facebook friends we have, the better chances of convincing the government that changes to the land transfer tax are required.
The commercial features a younger couple in conversation with an actor portraying a real estate agent, who explains what the closing costs are for the house they are about to make an offer on. The couple reacts with surprise at how much the land transfer tax will cost them.
The commercial then shows how the LTT in relation to the average price of a Winnipeg home has gone up ten-fold since it was introduced in 1987.
One reason the LTT is so punitive is that the government has never indexed it to reflect home price increases since its implementation. Instead, the government in 2004 increased the highest tax percentage levied from 1.5 per cent to two per cent for any dollar amount over $200,000. As a result, for every $50,000 in property value above $200,000, the government collects an additional $1,000.
When more home buyer activity occurs in the higher-price brackets, the income generated for the province increases accordingly. In fact, this is why in 2010, despite MLS® home sales being down in comparison to 2009, the provincial government took in an extra $3.6 million.
Remember to remind your MLA about how unfair this tax is to home buyers.