Ontario has some of the highest housing-related taxes in the world and it's time buyers understood exactly what they're paying. If you buy a new home in Ontario today, nearly 36% of the purchase price goes to taxes. That's $380,000 on the average $1.069 million new construction home, up 74% since 2022. This massive tax burden comes from three main sources: development charges, HST with outdated rebates, and land transfer taxes that haven't kept pace with housing prices. These aren't all costs that get rolled into your mortgage. They're cash you need upfront, making homeownership increasingly out of reach for first-time buyers.
When you buy a new home in Ontario, you're hit with three major taxes. First, development charges: fees municipalities charge developers (who pass them to buyers at closing) supposedly to fund infrastructure like roads, water, and transit. These often exceed actual infrastructure costs, especially in established areas where infrastructure already exists. There's virtually no transparency on where this money actually goes. Second, HST at 13%. That's $130,000 on a million-dollar home. The federal HST rebate hasn't changed since the 1990s and only applies to homes under $450,000, meaning most Ontario buyers don't qualify. The Ontario rebate gives you up to $24,000 (75% of the provincial portion), but it was set in 2009 and doesn't reflect today's market. Third, land transfer tax: a bracketed tax ranging from 0.5% to 2.5% depending on price, hitting $16,475 on a $1 million home. In Toronto, there's a municipal land transfer tax on top, doubling the cost to $32,950. First-time buyer rebates ($4,000 provincial, $4,475 Toronto) haven't been updated since 2017 and barely make a dent. In 2022, the average new home would have cost you $218,390 in taxes. Today it's $380,000, a 74% increase.
This massive tax burden is arguably contributing to our extremely weak pre-construction market. Why would anyone build new homes if the cost to buy them is prohibitively high because of taxes? And why would buyers pay these crushing upfront costs when resale homes don't carry the same penalty? Here's the part people overlook: these taxes aren't part of your purchase price and don't get added to your mortgage. This is cash you need at closing, on top of your down payment. If you don't have it, you're looking at loans or lines of credit. First-time buyers are hit hardest because they don't have equity from a previous home to help with immediate cash. We keep hearing politicians say "we need more supply, we need more supply." And while that's true, we've seen an increase in supply, especially in the condo market, and it hasn't helped affordability. Beyond just building more homes, we need real tax reform that makes housing more affordable. High housing taxes don't just make buying expensive. They actively discourage development and limit supply, creating a feedback loop that keeps prices high and inventory low.
Development charges with zero transparency, HST rebates frozen since the 1990s and 2009, land transfer tax rebates that haven't moved since 2017: these are policy choices that funnel cash to governments while pricing regular buyers out of the market. A 74% increase in taxes on new homes in three years is insane. That's $380,000 in cash you need upfront on an average new home. If there's a tax or policy that affects housing affordability, this is it. Whether it's adjusting rebate thresholds to reflect actual home prices, reducing or adding transparency to development charges, or rethinking how we tax home purchases, there's real work that can be done. I'm part of TRREB's Government Relations Committee, and we actively advocate for these policy changes. Whether it's adjusting rebate thresholds to reflect actual home prices, reducing or adding transparency to development charges, or rethinking how we tax home purchases, there's real work that can be done. Because right now, we're taxing housing like it's a sin, and all it's doing is locking people out.
