A home speculation tax is one step closer to becoming a reality in Toronto.
City council has agreed to ask the provincial government to introduce the tax in an effort to rein in soaring property prices driven by land speculators who are purchasing multiple homes and flipping them for huge markups.
According to the Canada Mortgage and Housing Corp., home prices in Canada have risen 30% since the start of the COVID-19 pandemic and land speculation is partially to blame.
In Toronto, real estate prices have hyper escalated with the average price across all residential property types hitting a peak of $1,073,111 in January, up nearly 24% from $866,331 a year earlier.
It is not immediately clear what form such a tax could take. However, the original motion put forth by Coun. Mike Colle referenced imposing a 50% land speculation tax on people buying and selling homes that were not their principal residence.
This idea is not new to Toronto. In the early 1970s, Ontario premier Bill Davis implemented such a tax. While it was met with backlash, it is credited with slowing the extreme increase in property values at that time. The tax was relatively short-lived and eventually decreased to 20% before being scrapped altogether.