Toronto Approves Higher Land Transfer Tax on Luxury Homes Over $3 Million

Toronto City Council Approves Higher Land Transfer Tax for Luxury Homebuyers

Toronto city council has officially approved a higher municipal land transfer tax (MLTT) for luxury homes, marking a significant policy shift that will affect buyers purchasing properties valued above $3 million.

Following a lengthy and, at times, heated debate, council voted 17–7 in favour of the motion introduced by Mayor Olivia Chow. The tax increase is set to take effect in April 2026 and is expected to generate $13.8 million in additional city revenue in its first year.

This marks the second increase to Toronto’s luxury land transfer tax in recent years, following a similar adjustment in 2023.

What the Mayor Says the Tax Is Meant to Do

Mayor Chow framed the increase as a targeted affordability measure aimed at easing pressure on everyday Torontonians.

She told council that the tax would apply only to the wealthiest segment of buyers, estimated at roughly the top two per cent of the market.

“If you have enough money to buy luxury properties, then you pay a bit more,” Chow said, describing ultra-high-end homes that may include multiple bathrooms, extensive parking, indoor pools, and luxury finishes.

According to the mayor, the goal is to raise revenue without further burdening average homeowners or renters.

Concerns Raised by Some Councillors

Not all councillors supported the move.

Councillor Jon Burnside questioned whether targeting luxury buyers truly addresses affordability, pointing out that residential property taxes have already risen significantly under the current administration.

Councillor Brad Bradford was more critical, arguing that the tax increase comes at a time when Torontonians are already facing higher costs for essentials such as groceries, rent, fuel, and borrowing.

He suggested the measure would ultimately make living in Toronto more expensive, not more affordable, and raised concerns that wealthy buyers could choose to purchase outside the city to avoid the higher tax.

The debate intensified when Bradford questioned the mayor’s past opposition to increasing first-time homebuyer rebates, suggesting her stance on affordability had changed ahead of the 2026 municipal election.

Mayor Chow responded by pointing to the budget challenges she inherited when she took office and emphasized that the city’s financial position has improved due to decisions made during her term.

Redistribution vs. Revenue: A Broader Debate

The tax hike also sparked a philosophical debate at council over redistribution.

Councillor Stephen Holyday opposed the increase on principle, describing it as a redistribution tax rather than one driven by service needs. He questioned whether targeting a small segment of the population could lead to broader tax increases in the future.

Other councillors disagreed.

Councillor Lily Cheng pointed to income inequality in Toronto and argued that higher earners should contribute more to support vulnerable residents and essential services.

Councillor Dianne Saxe echoed that sentiment, saying that those with greater means should shoulder a larger share of the burden — while also cautioning against stereotyping entire neighbourhoods as wealthy.

Where the Money Will Go

Council also passed a motion directing that all revenue from the increased tax be allocated to transit and housing initiatives that directly benefit Toronto residents.

This allocation was designed to address concerns about transparency and ensure the funds are tied to visible public benefits.

How the New Luxury Land Transfer Tax Will Work

The tax increase will apply on a graduated scale for properties sold above $3 million:

• $3M–$4M: total MLTT rate increases to 4.40%

• $4M–$5M: total MLTT rate increases to 5.45%

• $5M–$10M: total MLTT rate increases to 6.50%

• $10M–$20M: total MLTT rate increases to 7.55%

• Over $20M: total MLTT rate increases to 8.60%

What This Means for Toronto’s Housing Market

For most buyers, this change will have no direct impact. However, for luxury buyers, developers, and sellers operating at the high end of the market, the increased land transfer tax adds another cost to an already expensive transaction environment.

With Toronto’s next municipal election scheduled for October 26, 2026, housing affordability, taxation, and fiscal policy are expected to remain central political issues.

As always, buyers and sellers considering high-value properties should factor upcoming tax changes into their timing, pricing strategy, and overall financial planning.