RE/MAX – Spring market trends report 2014 with mention of the Manitoba Land Transfer Tax. Click here for the report.
See pages 18 & 19 of this report for information specific to Winnipeg, Manitoba.
Help us let the Province of Manitoba know you care about this issue. Sign our petition and share it with your social networks.
The Hon. Jennifer Howard
Minister of Finance
Room 103 - Legislative Building
The land transfer tax is a major impediment for Manitobans to buy a home. It is hard enough to save enough money for the required mortgage down payment let alone other closing costs without having to come up with another $3,650 in additional closing costs for a home priced at $300,000.
How can you leave a tax unadjusted for 25 years? When the tax first came out, the revenue neutral fee was used to pay the clerical administration costs at Land Titles Office of approximately $250.00. Now with the large growth in our property values, we pay a much greater amount, which severely impacts home buyers (especially new homebuyers) ability to finance even an average priced Manitoba home.
Homeowners already pay significant property taxes on their home. The land transfer tax is simply another tax on the same piece of property.
The land transfer tax rate of 2% for any purchase amount over $200,000 is far too much and has resulted in our province having the highest land transfer rate in the country. It can often mean the difference of having to remain a renter as the land transfer tax can literally put a new home out of reach for potential home buyers.
As mortgage brokers or REALTORS® can tell you, the difference between qualifying for a loan - or not qualifying for a loan - may be a few thousand dollars or the amount of the land transfer tax. At the very least, the land transfer tax should be waived for first-time home buyers. Doing so would help free up rental units for Manitobans (especially for new immigrants) unable or not interested in owning a home at this time.
The outrageous amount of Manitoba's land transfer tax is punitive to anyone other than the well off who want to own a home. For many, it has become one of the largest single tax payments they will make in Manitoba. It is time for you to listen to Manitobans and take action on this unfair tax.
Winnipeg Free Press article from April 16, 2014 with mention of the Manitoba Land Transfer Tax. Click here for the article.
Winnipeg Sun article from April 16, 2014 with mention of the Manitoba Land Transfer Tax. Click here for the article.
Real Estate News article from March 14, 2014 about the Land Transfer Tax. Click here for the article.
This city-wide Omnibus survey was designed and conducted by Probe Research via telephone interviews taken between September 19th and September 28th, 2013 with a sampling of 600 adults residing in Winnipeg.
With a sample of 600 one can say with 95 percent certainty that the results are within ± 4.0 percentage points of what they would have been if the entire adult population of Winnipeg had been interviewed. The margin of error is higher within each of the survey’s population sub-groups.
Modified random digit dialing was used to ensure that all city adults would have an equal opportunity to participate in this Probe Research Inc. survey. Minor statistical weighting has been applied to this sample to ensure that age and gender characteristics properly reflect known attributes of the city’s population. All data analysis was performed using SPSS statistical analysis software.
Winnipeg homeowners were asked if they believe that the rates at which the Land Transfer Tax (LTT) is charged should be adjusted to reflect current housing prices.
As the graph below illustrates, currently 65 percent of all Winnipeg adults – and a similar proportion (63%) of Winnipeg home owners – advocate for this change. Among citizens who support adjusting the LTT (65%), this includes 31 percent who strongly agree that it should be changed to reflect current market realities and an additional 34 percent who somewhat agree with this statement. Slightly fewer than three-in-ten Winnipeg adults, on the other hand, do not agree with the idea of adjusting LTT to reflect contemporary housing prices (28%, including 17% who strongly disagree and 11% who somewhat disagree). Five percent of respondents were unsure or did not respond.
Citizens who are more likely to support adjusting the LTT include:
Looking at the year-over-year comparison among homeowners, it is clear that the proportion of Winnipeg homeowners who agree that LTT rates should be modified has increased substantially in the past year. Today, 63 percent of homeowners strongly or somewhat agree that the current LTT regime should be changed, compared to just 50 percent among this same population in December 2011.
Respondents were also asked if they would support an exemption to the LTT for first-time homebuyers. There is a great deal of backing for this idea among the general population, as three-quarters of those surveyed would support waiving the LTT when a first-time homebuyer purchases a home (74%, including 49% who strongly support the idea and an additional 25 percent who moderately support it). One-in-five citizens, on the other hand, are against an exemption to LTT for first-time buyers (21%, including 10% strongly oppose and 11% moderately oppose). Four percent of those surveyed were undecided.
As the graph below illustrates, the proportion of citizens who favour an exemption for first-time homebuyers is virtually similar to the proportion of homeowners who support this idea (75% of current homeowners strongly/moderately support, versus 74% among the general population).
Notable variations among respondents include:
The following graph shows that among Winnipeg homeowners, support for the notion of exempting first-time homebuyers from paying LTT is virtually unchanged over the past two years (72% strongly/moderately support in 2011 and 75% in this current sounding).
Overall, one-half of all Winnipeg adults (51%) report that they have paid LTT at some point in their lives, with 43 percent indicating that they have never paid LTT and six percent not recalling if they have paid this tax. As the graph on the right shows, the proportion of Winnipeg homeowners who have paid this tax has increased slightly since 2011 (from 55% to 59% today).
Notable variations among respondents include:
For more information on this research project, please contact:
Probe Research Inc.
Suite 850 – 125 Garry Street
Winnipeg, Manitoba R3C 3P2 Attention: Kevin McDougald, Research Director
Tel.: (204) 926-6565
Fax: (204) 926-6566
Winnipeg Sun article from December 7, 2013 about the Land Transfer Tax. Click here for the article.
Real Estate News article on Land Transfer Tax from July 5, 2013. Click here for the PDF.
Winnipeg Sun article from June 1, 2013 about the Land Transfer Tax. Click here for the article.
Editorial piece from the Winnipeg Free Press of May 28, 2013 discussing the NDP government and its thoughts and actions on taxation. Click here for the article.
Survey conducted by Probe Research on behalf of WinnipegREALTORS® published December, 2011. Click here for PDF.
Tom Brodbeck of the Winnipeg Sun article on the “Monter Cash Grab” that is the Provincial Land Transfer Tax. Click here for PDF.
WinnipegREALTOR® Press Release of September 21, 2011 urging voters to ask their candidates where they stand on the Land Transfer Tax. Click here for PDF.
Winnipeg Real Estate News article on Land Transfer Tax from April 8, 2011. Click here for the PDF.
For those who like to pour over data, check out this table demonstrating the growth in Land Transfer Tax from 2000 to 2010. Click here for PDF.
1. What is the Land Transfer Tax?
a. This is a Home Buyers’ Tax levied by the Provincial Government when homebuyers become the new registered owners of the property they just purchased. This levy happens with each property transfer meaning someone could pay this levy a number of times throughout their lifetime of purchasing properties.
However many times you may be required to pay it, you do not derive any additional benefits or put additional burdens on public services (except for minimal administrative costs) as compared to someone that does not move at all.
In Manitoba’s case it already has a title registration fee of $70 which is not included in the land transfer tax.
2. What is Manitoba’s Land Transfer Tax rate?
Value of Property Rate
On first $30,000 0.0%
On Next $60,000
(i.e. $30,001-$90,000) 0.5%
On Next $60,000
(i.e. $90,001 – $150,000) 1.0%
On the Next $50,000
(i.e. $150,001 – $200,000) 1.5%
On amounts over $200,000 2%**
**This rate came into effect in 2004
3. How do these rates compare to other jurisdictions?
a. It can be said that the exemption from 0- $30,000 where there is no charge and the .5% charged on the $30,001 – $90,000 or the 1% from $ 90,001 – $150,000 would not be considered out of line with other provinces. However, the 2% tax rate charged for any amount over $200,000 is the highest one in the country.
In February 2009, 56% of home sales went for prices over $200,000 so the highest land transfer tax rate in the country applies. With the progression over the years of higher home values provincial land transfer tax revenues have skyrocketed. Even comparing February 2009 MLS® home sales with the same month a year ago, revenues went up 29%. From February 2000 to February 2010 the revenue has increased 600 per cent.
4. When was the Land Transfer Tax implemented?
a. It was introduced in the late 1980’s when the average sale price of a home in Winnipeg was $81,611. This average sale price now has nearly tripled since then.
The average home sale price in February 2010 was $228,000. Not surprisingly, back when it did come into effect the vast majority of home sales were under $200,000.
5. Have there ever been any adjustments to the Land Transfer Tax or indexing to account for the higher property values over the years?
a. Yes, there has been one adjustment and that was to increase the highest rate of 1.5% in 2004 to 2% for any amount over $200,000. As a result, the 2% rate is the highest land transfer tax rate in the country. b. As for indexing, nothing has been done since the land transfer tax was brought in.
The Canadian Association of Accredited Mortgage Professionals (CAAMP) in a 2007 study showed Manitobans in the first nine months in 2007 in comparison to 1997 paid a 358 per cent increase in land transfer taxes.
6. Can the Land Transfer Tax be included as part of financing in a new mortgage?
a. No, it is another closing cost that must be paid before you can register your new property.
b. Making the land transfer tax even more difficult to accept and manage to come up with the required levy amount based on the sale price of a property purchased is Manitoba’s low disposable income relative to the rest of the country. In the 2009 Manitoba Check-Up Report done by the Chartered Accountants of Manitoba, it shows Manitobans had the lowest disposable income (income after taxes) yet our government has the highest land transfer tax in the country at 2% for any amount over $200,000.
c. Manitoba’s disposable income is more than $2,000 less than the Canadian average.
7. Does Manitoba provide any exemptions on the Land Transfer Tax?
a. There are a few such as farm land when it is bought with the intended purpose to continue using the land for farming. One important exemption, not provided in this province, where in a number of other provinces it is included as part of the land transfer tax, is a first-time home buyer exemption. In British Columbia, firsttime buyers do not have to pay any land transfer taxes on any amount up to $425,000.
8. What do Land Transfer Taxes mean to the province in terms of revenues?
a. In 2009, the land transfer tax revenue was $49.6 million. $44.8 million was collected in 2008; a 17.2% increase from 2007. Based on the lack of indexing and the adoption in 2004 of the highest land transfer tax rate in the country of 2% starting at the lowest price point of $200,000, the land transfer tax is clearly a source of increasing revenues for the Province derived largely on the backs of home buyers.
9. If Manitoba is willing to make adjustments in rates and/or house value brackets upon which they apply, including offering a first-time home buyer exemption, are their ways it can recover the lost revenue it stands to gain every year as property values rise?
a. If the potential loss in revenue is even $10 million, it represents approximately one-thousands of its total budget. So holding the line on spending and finding more efficiencies in the Province’s entire operations should be possible. It is a matter of prioritization to recognize home buyers are as important to the fabric of the economy as many other government spending priorities such as polar bears, doctor’s tuition rebates or a UNESCO heritage-site designation.
b. It is also important to point out the more money left in home buyers’ pockets from reducing the land transfer tax burden will go back directly into the economy. As anyone who has bought a new home knows, they will need to spend money on ancillary purchases such as drapes, flooring, new furniture and other home improvement items.
c. And as for lost sales activity due to the fact the land transfer tax inhibits first-time home buyers from buying a home or move-up buyers from selling their home and buying another one, there is a significant loss in economic spin-offs. Every home sale generates $40,000 in ancillary spending. It also impacts new home construction negatively due to potential buyers finding the high land transfer taxes on a new home too steep and through impeding the resale house market in lower price ranges where sales of existing homes provides the necessary equity for a buyer to qualify for the price of a new home.
10. How does the Land Transfer Tax impact the housing market?
a. The simplest answer is it makes housing less affordable and prevents a number of potential buyers, especially first-time buyers, from qualifying to purchase a home. It is tough enough to come up with the necessary down payment and closing costs let alone find additional dollars to pay for the land transfer tax.
b. Land transfer taxes discourage home ownership so do nothing to alleviate a scarce supply of good rental accommodations since there is less movement out of rental property into homes.
c. As CAAMP economist Will Dunning says in his 2007 study on the perils of nonindexation in Canadian housing markets, “Land transfer taxes do not pass any tests of fairness. They are discriminatory (applying to only a small percentage of the population each year) and the amounts paid cannot be justified on any reasonable measure of costs to government at large. These very rapid increases in land transfer taxes have pushed them even further into the realm of unfairness.”
d. The land transfer tax is just another real estate tax as owners pay property taxes every year and then must pay thousands more when buying another home. It is a double tax.
e. A land transfer tax can be a deterrent to investment in this province as high closing costs discourage housing opportunities for first-time buyers and others from making their home in our province. As a result, we lose the opportunity to attract new business investment to respond to the increased demand for goods and services resulting from new home purchases.
f. A land transfer tax discriminates against anyone that moves and buys another home.
g. The land transfer tax penalizes people with low amounts of equity in their home since it taxes the entire gross sale amount. The pick pocket tax robs the home equity from unsuspecting home buyers if they have been fortunate enough to build up equity in the home they own.
h. The tax reduces housing opportunities across the entire income spectrum.
Writer Paul Turenne article in the Winnipeg Sun of March 22, 2010. Click here for the PDF.
WinnipegREALTORS® press release of March 22, 2010. “Rising Like The Red River: Land Transfer Tax Revenues Go Up Every Year”. Click here for the PDF.
1. It levels the playing field with other provinces and positions Manitoba for
2. It puts new buyers into the marketplace thus creating more home sales. Each
sale creates ancillary spending of $40,000.
3. It will help keep the real estate market stable in a tougher economic
environment where there are more stringent mortgage qualification
requirements and higher interest rates.
4. It will make housing more affordable.
5. It will free up very scarce rental accommodation.
6. It will spur on new home construction.
7. It will keep people working while stimulating the economy. It is cheaper to
keep people working than to create new jobs.
8. It will help maintain consumer confidence in difficult times.
9. It will show that the government is sensitive to the challenges first-time
buyers face in meeting down-payment and closing costs.
10. It will not prejudice other investments over housing – a most basic shelter
The Land Transfer Tax is a formidable type of provincial sales tax that most home buyers don’t budget for and unfortunately, it is a $50million dollar provincial revenue that falls on home purchasers alone to generate- the minority of Manitobans. Although removing the tax altogether would likely have negative consequences on our provincial budget, we would love to see a system of credit wherein the tax you pay on your first home purchase could be used as credit against the taxes paid on future purchases. This would ease the financial burden for home buyers and would still generate revenue for the province.
My wife and I recently bought our first home this summer. Like most first time home buyers, we were surprised and a bit intimidated by all the paperwork, decisions, and technicalities that are involved in the process. Of course, it was all worth it in the end. We are happy to call our new place our own. However, we were alarmed by the amount of money one fee in particular cost. The land transfer tax. We have asked a few professionals what this large sum of money goes towards, and it seems everyone is in the dark on this one. This is frustrating for us because we are already paying tax on the property annually. When we bought the property, we knew that the shingles and kitchen appliances would need to be replaced within the year. If the land transfer tax was eliminated for first time home buyers, these savings would go towards those costs. But unfortunately, appliances will have to wait and we had to skimp on our roofing costs. It is clear that this tax is hurting the economy, as ou…
As a Mortgage Broker and homeowner, the current rate for Land Title Transfer tax is not only outrageous but ridiculous for anyone purchasing their first home or anyone who wants to upgrade. The amount that clients have to save for their legal fees is mind boggling for my clients. They need to reduce the percentage and just have the same percentage for everyone, no matter what price you are paying for your home. When I have called personally and asked “Where does my $6,000 go to” the customer service rep said “$70 goes towards the transfer (paperwork) and the rest is tax”. PLEASE change this as other provinces are NORMAL!
Although we purchased a house here in Winnipeg in 2003, its value has gone up considerably and at some point we are considering downsizing which of course would mean the purchase of another house or condominium. However, the thought of having to pay the increased amount involved in the revised 2004 tax (2%) makes us hesitant to go ahead. We will wait until something can be done to improve the LTT situation. I would appreciate any website that would keep us current on this situation or anything further we can do as homeowners.
With the benefits one gets from the City this tax is outrageous! You get penalized for investing in your home because it sells for more. In addition the same work is required to transfer a home regardless of cost, it has made me invest elsewhere in the world and not in Manitoba.
Our REALTOR® told us about the Land Transfer Tax and that we would be looking at paying over $2000.00. We were shocked at the amount of the Land Transfer tax when we saw it on the Lawyer’s statement. We wondered how we would come up with the $2200.00 we were expected to pay.
I think the Land Transfer Tax amount is excessively high
As a first time buyer, first of all I had to come up with the 5% deposit. Then I discovered that I had to pay this huge amount of money for Land Transfer Tax. That was extremely hard and extremely unfair.
I think the amount we had to pay in Land Transfer Tax is outrageous.
I just bought a property and I am extremely angry about the amount I have to pay. Most of the money I earn seems to go to the government in one way or another. The Land Transfer Tax is an outrageous amount. What do they do for this money? Nothing! What do we get in return for this money? Nothing! People who do not buy property do not have to pay this tax. This is discrimination and a bias against property owners. I have some other properties that I would like to move into a corporation which I cannot do because of the ridiculous amount I would have to pay in land transfer taxes for each of them. Property owners seem to be discriminated against at every turn especially here in Winnipeg with our high property taxes owing to the education taxes and the land transfer taxes. Stop this discrimination!