BMO offers to pay new Toronto tax

The Bank of Montreal is offering to ease the tax burden on new homeowners by offering to spring for some of the costs. BMO announced it would pay Toronto’s new land transfer tax for their clients who close on a new home purchase by February 2008.

The customer also needs to sign on to a fixed closed mortgage with a minimum five-year term. The bank will cover the land transfer tax up to 1.5 per cent of the mortgage.

The Toronto Real Estate board has reported more people are rushing to close on property deals to avoid having to pay the tax, which comes into effect next year.

“Purchasing a home is the largest investment most of us will ever make,” said Cid Palacio, vice president of BMO Bank of Montreal, in a news release.

“It’s important that Toronto homeowners don’t feel pressured into making a purchase decision based on this new tax.”

Under the city’s regulations, first-time homeowners will get a rebate on the new tax if their house costs less than $400,000.

Under the tax, people will have to pay:

• 0.5 per cent on a house that costs up to $55,000
• 1 per cent on a home that costs between $55,000 and $400,000
• 1.5 per cent on a house that costs up to $40 million

Here are a few examples of what a homeowner might pay with the new land transfer tax:

• If a home costs $250,000, the owner will pay $2,225
• If a home costs $400,000, the owner will pay $3,725
• If a home costs $600,000, the owner will pay $7,725

“We know the impact of this new tax can be significant for potential buyers, particularly when you add up other associated costs of home ownership,” said Alex Dousmanis-Curtis, BMO senior vice president for the Greater Toronto division. “Our advice is to speak with a mortgage expert and explore the variety of options available to you before rushing into a decision.”