Toronto considers new tax for homeowners to help curb soaring house prices

A for sale sign outside a home indicates that it has sold for over the asking price, in Ottawa, on Monday, March 1, 2021. (THE CANADIAN PRESS / Justin Tang)

Toronto City Council will consider asking the provincial government to introduce a home speculation tax during a meeting this week, as it continues to look for new ways to rein in the city's soaring home prices.

The idea was first proposed by Eglinton-Lawrence Coun. Mike Colle during the December meeting of city council before being referred to Mayor John Tory’s executive committee for further consideration.

At a meeting scheduled to begin tomorrow, councillors will have the final say on whether the city will formally ask Queen's Park to implement a “home Speculation and home flipping tax” locally.

It is not immediately clear what form such a tax could take, however in his original motion Colle referenced a 50 per cent land speculation tax that was “credited with slowing the extreme increase in property values in Toronto in the 1970s.”

“If you look at the foundation of all the policies we've adopted in terms of trying to improve the availability of housing, including affordable housing, a lot of it has been with a view to placing first the notion that people are to live in homes and homes or for people to live in,” Mayor John Tory told reporters during a briefing at city hall on Tuesday.

“Homes are to invest in as well but you can never let the financial aspects of this surpass the obligation that we have to find more homes for more people to live in, hopefully as affordably as possible. So it is something that I think is a worthwhile signal for us to send as a city council given the challenge we face in terms of finding housing for people in our city.”

Real estate prices in Toronto have soared since the onset of the pandemic with the average price across all residential property types hitting a peak of $1.095 million at the end of 2021.

The city’s real estate board has in the past spoken of a need to increase supply to bring housing prices under control but in a letter sent to Tory’s executive committee last month it warned that a speculation tax “could primarily impact small-scale mom and pop investors who also happen to be a key source of supply.”

“TRREB strongly believes that public policy targeted at the housing market should be evidence-based. In this regard, it is not clear that another speculation tax on the sale of non-principal residences will have any sustainable benefit with regard to housing affordability, and in fact, could create numerous unintended consequences that would cause new challenges for homeowners, buyers, and renters,” TRREB President Kevin Crigger said in the letter.

Toronto city council does not have the authority to impose a house speculation tax on its own and would need the provincial government to pass legislation putting such a tax in place.