Did the Land Transfer Tax Reduce Housing Sales in Toronto?

Murtaza Haider (), Amar Anwar and Cynthia Holmes
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Cynthia Holmes: Ryerson University

No 28, IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance

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.

Keywords: land transfer tax; housing sales; housing market; consumer behavior; Toronto; Greater Toronto Area (search for similar items in EconPapers)
JEL-codes: H31 H76 R31 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2016-07
New Economics Papers: this item is included in nep-pbe and nep-ure
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Citations: View citations in EconPapers (3)

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