We were grateful that the Honourable Jim Flaherty, Canada’s Minister for Finance didn’t increase the minimum down payment to 10%, as he was contemplating. First Time Homebuyers have a lot of saving to do, requiring that they save 5% of the purchase price, plus another 2% to 2.5% in Closing Costs in Manitoba- the majority of which is made up of a tax levy called Land Transfer Tax. On top of this, our average home price has increased year-over-year for the past eight years, increasing the mimimum down payment and capital required to complete a purchase.

Land Transfer Tax? This is the tax grab that the Manitoba government places on the transfer of a property and is born by the purchaser. This is done electronically, and the process is simply registering a new owner at The Property Registry – which in reality is a clerk inputting the name of the new owners, legal description and mortgage information that is registered against the property. This is accomplished literally in less than a minute. In Manitoba it is calculated on the purchase price of the property and can add thousands of dollars to the closing costs. For an example, a $300,000 property in Manitoba has a Land Transfer Fee of $3,720! We feel this is a shameless tax grab.

For comparison purposes, the same property valued at $300,000 in Alberta would only cost $115 to transfer the title, and $900 in Saskatchewan.

The Manitoba government boasts about the taxes it reduced in the past nine years, but is very quiet about levies that have increased. The Land Transfer Tax levy increased a whopping 358% between 1997 and 2007 and is now one of the highest in the four western provinces. The province is entitled to charge a reasonable fee for registering the legal descriptions of the property at Land Titles, however the fee schedule is totally unreasonable. In 2010, the Manitoba government collected nearly $24 million.

The Land Transfer Tax is based on a sliding scale on home values, and increases greatly once the purchase price exceeds $200,000. Since the Land Transfer Tax was brought into legislation in 1987, the average house price in Manitoba has risen dramatically ($80,000 versus $230,000). More importantly, the activity where most home sales are happening is much more accentuated in higher price ranges within the last few years. The under $100,000 sales which used to represent 60% of the total sales in the late 1990s now is hovering around 10% of total sales, while sales over $200,000 represent more than one out of every two sales.

The Winnipeg Realtor’s Association is proposing some immediate changes to the Manitoba goverment’s Land Transfer Tax calculation, and this makes a lot of sence. To view the details, visit their website www.2muchltt.com. We fully support the changes they are proposing:

1. A first time homebuyers Land Transfer Tax exemption (This would encourage our young people to stay in Manitoba. It also makes entering the housing market more affordable for first time homebuyers. An exemption is already present in B.C. and Ontario, and Alberta and Saskatchewan do not have a Land Transfer Tax.)

2. Adjust the current Provincial Land Transfer Tax brackets and tax percentages to reflect more accurately the current housing market. $0 – $100,000 value – .5%, $100,000 to $200,000 value – 1%, $200,000 to $500,000 – 1.5%.

3. Consider putting a cap at the upper end of the housing market (eg. no tax applicable over $500,000). This will be helpful to new home construction.

What can you do? Email your local Member of Parliament indicating your support for the Winnipeg Realtors proposal to reform Land Transfer Tax!

We thank you for your support!