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 1.5% to 2% 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 minimum 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.

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.

A few ways to control this:

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.

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.