The Toronto City Council has approved a new land transfer tax increase on luxury homes, targeting properties valued at $3 million and above. While Mayor Olivia Chow argues the move supports vulnerable communities, others warn it may send the wrong message to investors and buyers. Here’s how the Toronto luxury home tax increase could impact East Toronto real estate and what it means for you.
How Much Will the Tax Increase?
Starting April 1, 2026, the land transfer tax on homes between $3 million and $4 million will rise from 3.5% to 4.4%. For homes valued at $20 million and above, the tax jumps from 7.5% to 8.6%. This additional charge is expected to bring in $13.8 million in extra revenue next year.
While this change won’t drastically alter Toronto’s $19 billion operating budget, it reflects the city’s limited revenue tools. Chief Financial Officer Stephen Conforti noted that property taxes are a “static” revenue source that doesn’t grow with inflation like income or sales taxes.
Will This Affect the Housing Market?
Despite fears it could slow the market, the city’s data shows that luxury property sales have remained steady, even amid broader market cooldowns. That includes East Toronto real estate, where some exclusive neighbourhoods have seen consistent demand in the high-end market.
However, some councillors argue that this move could feel “divisive.” They warn that it may deter investment and push affluent buyers to nearby municipalities. Others believe it’s a fair way to redistribute wealth in a city with growing inequality.
First-Time Buyers and Affordability
A separate motion to expand the first-time homebuyer rebate for homes under $800,000 was defeated, although the city is exploring ways to improve the program. This leaves many younger buyers still facing a tough climb into Toronto’s competitive housing market.
If you’re a first-time buyer in East Toronto, you may want to review your eligibility for existing rebates and explore emerging areas like Scarborough Junction or Danforth Village, which still offer better entry points.
What This Means for East Toronto Real Estate
For sellers of luxury homes in neighbourhoods like The Beaches or Leaside, this new tax may influence listing strategies ahead of the April deadline. Buyers planning to purchase in this price range should consult their agent now to understand how the Toronto luxury home tax increase affects their budget.
Plan Ahead for the Tax Changes
The Toronto luxury home tax increase won’t shake the market overnight, but it adds another layer of complexity for buyers and sellers in 2026. Whether you’re considering selling a high-end home or entering the market for the first time, strategic planning is key.
Contact us today for a personalized home valuation or buying consultation, before these new tax changes take effect.
