Final answer:
The land transfer tax in Ontario uses varying rates based on the property's sale price. Rates start at 0.5% for the first $55,000 and go up to 2.50% for amounts over $2,000,000 for single-family residences. The detailed answer also discusses the challenges local governments face with property tax revenue and legislative measures taken to limit tax increases based on property value.
Step-by-step explanation:
The land transfer tax in Ontario is calculated based on the price of the property being transferred. As of January 1, 2017, the tax rates apply as follows:
- 0.5% on the first $55,000
- 1.0% on the portion between $55,001 - $250,000
- 1.5% on the portion between $250,001 - $400,000
- 2.0% on the portion between $400,001 - $2,000,000
- For lands with one or two single-family residences, a 2.50% rate is applied to the amount over $2,000,000.
The provided tax brackets:
- $7,500 + 25% of the amount over $50,000
- $13,750 + 34% of the amount over $75,000
- $22,250 + 39% of the amount over $100,000
- $113,900 + 34% of the amount over $335,000
- $3,400,000 + 35% of the amount over $10,000,000
- $5,150,000 + 38% of the amount over $15,000,000
Meanwhile, the reliance of local governments on property tax revenue can pose problems. A lump sum collection method makes property taxes highly visible and hence unpopular. This has led to legal constraints on increasing property taxes, such as California's Proposition 13.