Every couple of years we seem to see Toronto increasing their municipal land transfer tax (LTT) on luxury properties.  It happened back in 2024, when increased rates were imposed upon sales in Toronto of properties over $3M, and it’s just happened again.

As of April 1, 2026, we have new rates for the LTT on the sale of properties over $3M in Toronto.  The provincial land transfer tax has not made any similar changes at any point, but the city of Toronto is rapidly increasing the cost to buy within the Toronto boundaries.

We looked at the anticipated increased revenue the city would make when they did this back at the start of 2024, we said they’d bring in about $27M in additional revenue as a result of the increases.  That sounds like a pretty significant amount, but keep in mind that back in late 2023, the City of Toronto’s updated Long Term Financial Plan and staff report showed an estimated $1.5 billion starting pressure for the 2024 operating budget and $29.5 billion in capital needs, which both form part of a $46.5 billion shortfall over the next 10 years.  The forecasted $27M would have brought in less than 2% of the amount needed to address the operating budget shortfall.

Given the city remains in difficult financial circumstances, it is clear that the increased tax didn’t help in a material fashion.  The latest increase is actually going to be far less impactful, as it is mostly increases of around 1%  for those higher price bands.

Let’s look at the new changes and how much additional money it could bring in – plus how many deals need to be lost as buyers decide to purchase their high end homes outside of the city.

Apples to apples.

We’re primarily focused on resale properties in our team and the data we can access is largely limited to residential resale properties.  As such, all of our analyses below are based on that data.   We’re after some broad (but accurate) implications of the new LTT rates, but we aren’t considering:

• non-MLS transactions
• builder/direct new-home and new-condo closings
• commercial / industrial / multi-residential / vacant land transfers
• other taxable conveyances the City records but that do not show up in our records

While some of the specific numbers of the implications of the new LTT rates will be understated, our analysis does paint a clear picture of what it means to the resale market.  Now that we’re officially covered, let’s get into it.

First, a history lesson.

We’ve created a handy chart to show the recent history of the Toronto Land Transfer Tax.  The orange column is what it was for about six years, and the blue columns show the rate increase amount that was put into place as of January 1, 2024.  The green column is the brand new rate increase amounts that apply to properties bought in the city as of April 1, 2026.

There have been no changes made to the land transfer tax due on the purchase of any properties up to $3M, but if you’re at that level or higher, we saw it go from a flat rate of 2.5% on any amount above the $3M level, to a graduated system.  The higher the price point, the higher the rate you’re paying on that portion of your purchase.

The latest round of increases have added about 1% to most of the price bands, with a range from 0.9% to up to 1.1%.

It’s all marginal.

A reminder that the land transfer tax is a marginal tax bracket, which means that for any price above a threshold, you pay:

• The full tax from all lower brackets
• Plus the tax on the portion that falls inside the current bracket

For example, a $1.2 million purchase does not pay 2.0% on the full $1.2 million. Instead, it pays:

• 5% on the first $55,000 = $275
• 0% on the next $195,000 = $1,950
• 5% on the next $150,000 = $2,250
• 0% on the remaining $800,000 = $16,000
• Which would bring the total municipal land transfer tax to $20,475.

This is relevant as we look at what impact these higher tax brackets will have on the sales taking place moving forward.

The past ain’t the future.

A caveat we often give is that what happened in the past is not necessarily indicative of what will happen in the future.  That being said, we need to base our analysis on certain assumptions, so the big assumption in our analysis here is that we’ll see similar types of transactions and numbers of transactions in 2026 as we did in 2025.  Here’s how the 23,475 sales in the city of Toronto were spread across the various price bands.

A few things about the above data are very relevant to our review.

First, 97% of the sales that took place in Toronto in 2025 were under $3M, which means the change that just took place is utterly irrelevant to those sales.  The Toronto LTT rate for these properties has not changed since 2017 and they can go merrily about their business.

The next thing worth pointing out is that the 740 sales that were in the $3M plus price bands last year were mostly in the $3M to $5M range.  59% of the sales were in the $3M to $4M band and another 22% were in the $4M to $5M band, so over 80% of the sales were in that $3M to $5M range.

If we assume that 2026 will see a similar spread of deals as we saw in 2025, how are these higher land transfer tax rates in those price bands going to bring in to the city in increased revenue?

It’s more, but it’s not a lot more.

We pulled the average price for each of the price bands for the sales in 2025 and then calculated the Toronto LTT for each of those bands.  This is relying on averages within each price band so it will not be 100% accurate, but it is enough to give us an idea of what 2026 will look like for increased revenue with the new increased LTT rates.

The city would have brought in about $450M in municipal land transfer tax in 2025 based on these sales.  With the new higher rates for the higher end price points, that means an estimated revenue for 2026 of about $458M, which works out to about $8M more in land transfer tax revenue for the city.

As we see very few sales at the $5M or above price point, the bulk of this $8M comes from sales in the $3M to $5M range.

$8M is still better than a kick in the pants, right?

The final aspect of the new LTT tax rates worth discussing is the fact that our model makes the assumption that the same level of sales take place in Toronto despite increasing costs for those buyers.  While it may be unlikely that a lower price point buyer will choose to buy outside of the city to save on the land transfer tax, we have had clients who considered the difference in closing costs significant.

At the higher price points that this latest round of LTT rate increases impacts, the difference between what you pay in Toronto versus surrounding municipalities amounts to significant dollars.

For example, a $5 million buyer in Toronto would pay about $272K in total LTT, of which $112K is the provincial portion.  If the buyer chose to purchase instead in another city such as Oakville, they would save $160K on their closing costs.  That’s a significant amount of money and while the latest increase in Toronto’s LTT rates doesn’t materially change the amount they pay, it is reaching levels that could result in some buyers deciding they’d rather put that money into a home purchase outside of Toronto.

While it is complicated to project how many lost deals it would take for the city to not see that projected $8M increased LTT from high end sales, we know that any purchase that moves outside of the city loses the entirety of the MLTT, not just the portion at the higher end.  Our calculation is that it would take about 67 of these high end deals leaving the city for that projected $8M in extra LTT revenue to disappear completely.

We regularly work with buyers and sellers impacted by decisions like this latest Toronto LTT rate increases, and it’s important that your agent understands the factors that influence the high end and luxury market in the city.  If you’re looking to buy or sell in the $3M plus range and want agents that understand how that segment actually works, get in touch!

The majority of our clients are both buying and selling real estate, often within the same city. They’re moving because of a change to their family, their work or their financial circumstances – and the home they’re in just doesn’t cut it anymore.

We went back and looked at the hundreds of deals we’ve done with clients and the city with the highest number of sellers actually moving to another part of Ontario or Canada is Toronto. It’s the biggest city in Canada and also where we’re based, so that’s not exactly shocking news, but it’s three times more common than other cities when we review our transactions. We do a lot of deals in Peel, York and Durham, but those clients are much more likely to be moving within the city they live in rather than moving away.

So, why is it more common for people to leave Toronto? Is it because they’re sick of hearing two-hour marathon chants of “Go Jays Go!” or because they want some distance from the annual disappointment of the Leafs being knocked out of the playoffs?

In our experience, these clients decide to buy outside of the city because it makes sense to them, because it fits with what they want in a home, in a neighbourhood, and in a lifestyle.

Let’s look into the reasons why people chose to move out of Toronto.

Home Prices

We know, this is an obvious one. As of October 2024, if you want to buy a home in Toronto, the average price is $1,166,000.

Compare that against the nine other largest cities in Ontario.

• Ottawa: $693,700
• Mississauga: $1,032,000
• Brampton: $972,000
• Hamilton: $798,500
• London: $645,000
• Markham: $1,273,000
• Vaughan: $1,189,000
• Kitchener: $742,000
• Windsor: $450,000

While Mississauga isn’t much cheaper – and Markham and Vaughan are actually a little bit more expensive than Toronto – there are lots of large cities in Ontario where your real estate dollar goes a lot further. We had a client who sold their one bedroom condo in Toronto this month and for not much more they have bought a high end townhouse in London.

Land Transfer Tax

This one isn’t always as readily apparent to buyers as the cost shows up late in the purchase process. In every part of Ontario, the purchaser of a home has to pay a land transfer tax to the province of Ontario. If you buy in Toronto, you also have to pay a land transfer tax of approximately the same amount to the City of Toronto.

If we use an apples-to-apples comparison, a $1M property in Toronto will cost $32,950 in land transfer taxes. The same property anywhere else in Ontario will result in land transfer taxes of half of that amount, which is a savings of $16,475.

As well, we should point out that the formula for land transfer tax is tiered so that lower-priced properties pay less tax. With Toronto’s average price of $1,166,000 and the double land transfer tax, buying the average property in the city will have you pay $39,950 in taxes.

Compare that to the other bigger cities in Ontario if you bought the average priced property and you’ll see the land transfer tax paid is significantly less.

• Ottawa: $693,700 average price, which means land transfer tax of $10,874
• Mississauga: $1,032,000 average price, which means land transfer tax of $17,390
• Brampton: $972,000 average price, which means land transfer tax of $16,090
• Hamilton: $798,500 average price, which means land transfer tax of $12,970
• London: $645,000 average price, which means land transfer tax of $10,225
• Markham: $1,273,000 average price, which means land transfer tax of $22,460
• Vaughan: $1,189,000 average price, which means land transfer tax of $20,230
• Kitchener: $742,000 average price, which means land transfer tax of $11,810
• Windsor: $450,000 average price, which means land transfer tax of $6,475

Even if you’re spending the same money as you would in Toronto, you will pay half the amount in land transfer taxes, so it definitely is a significant cost savings.

Family

Another reason clients choose to move out of Toronto is family. Whether it’s access to high-ranked schools, kids’ community programs, or proximity to aging parents, sometimes moving out of Toronto just makes life easier.

The influx of residents to Toronto means that schools, intramural sports, daycare, and other community resources and activities are oversubscribed and hard to get into easily or at an affordable cost. The lower land prices outside of Toronto can translate into more affordability for municipalities to build extra schools and daycares, and the lower density means less pressure on those resources that are in place.

Cost of Living

According to the 2023 Mercer Cost of Living survey, for the second year in a row, Toronto is the most expensive city in Canada in which to live.

Mercer ranked 227 global cities across five continents and Toronto sits 90th globally, having dropped one spot from last year’s ranking. Vancouver remains the second most expensive city in Canada and slid eight places to 116th in the ranking. Montreal fell 10 spots to 135th, Ottawa moved down five spots to 137th and Calgary, the last Canadian city on the list dropped four spots to 145th.

The good folks at WOWA have a cost of living calculator you can access here.

If we use that calculator and look at London, Ontario as an example, it makes even more sense why our client chose to move out of Toronto, with the cost of living in London being 14.7% lower than in Toronto. Housing is the biggest impact in terms of cost, coming in at 25% lower in London, but clothing, furniture and healthcare is also almost 15% lower in London than Toronto.

If you’ve ever marvelled at how easy it is to find free parking in smaller cities or towns, or paid a new fee to use a municipal service, you understand that living in a big city like Toronto comes with a lot of additional daily costs that add up over time.

Traffic

We can’t avoid what is quickly becoming the biggest annoyance in Toronto, as well as the most universally agreed upon statement, traffic is just terrible in the city now.

At the start of 2024, a new traffic index report from geolocation firm TomTom was released, using data compiled from over 600 million in-car navigation systems and smartphones. The company measured how long it takes, on average, to drive ten kilometres in various cities around the world and Toronto placed third out of 387 cities around the globe — and first in North America — for having the slowest traffic in 2023.

In Toronto’s city centre area, it took an average 29 minutes to drive 10 kilometres in 2023 — an increase of 50 seconds, nearly a minute, from last year. This makes Toronto traffic the slowest in North America, topped only by London and Dublin in first and second place, respectively.

Overall, the average Toronto driver loses around 255 hours to commuting every year. Rush hour traffic accounted for roughly 98 of these hours, when Torontonians were recorded driving at an average 18 km/h, the report found.

With the rise of remote work, it’s not surprising that people who can do the same job without being in Toronto are choosing to live somewhere with less traffic. It dramatically impacts your quality of life and makes everything harder to do. Whether it’s buying groceries, going out for dinner, visiting friends or family – it takes longer to get where you’re going and to get home afterwards.

If you’ve been considering making a move out of Toronto, than talk to us about your options. We have a network of trusted agents across Ontario and most parts of Canada and we’re of course happy to help you sell your home here in the city!