We are taxed to death… There, I said it.
I purchased my “forever home” in 2023 for more than I could afford at the time – we waited 6 months to get the keys and saved like chipmunks until the final land transfer tax bill came in. 135k for taxes. It crushed me. If I had closed post April 1st, 2026, I’d have paid another 22k; a silver lining, I suppose.
I believe the decision to increase this luxury tax is a result of lost revenue due to low sales transactions. Come April 1st, 2026, the amount over 3M will now be 4.4% for the amount over 3m.
The 3m mark is now the magical number, its when a home price becomes a tax event.
The $3M Wall
Here’s what most buyers don’t realize until they sit in my office and I casually slide the calculator across the table.
A $2.99M house comes with about $122,000 in land transfer tax.
A $3.5M house comes with about $170,000 in land transfer tax.
Same house.
Same neighbourhood.
Same cove lighting.
But now you’re writing a cheque that’s almost $50,000 bigger — just because you crossed an invisible line on a spreadsheet at City Hall.
That extra $500,000 is effectively taxed at around 9.5% when you combine the Ontario tax and Toronto’s new luxury tier.
And buyers feel it.
Deeply.
Why Every Luxury Listing Is Suddenly $2,988,000
Ever wonder why everything gorgeous in Rosedale, Riverdale and Forest Hill is suddenly listed at:
- $2,888,000
- $2,948,000
- $2,988,000
It’s not a coincidence.
It’s a strategy.
Because once you hit $3M, Toronto adds a new luxury tax bracket and suddenly that beautiful sunroom just cost you another kitchen renovation.
The “Overpriced Furniture” Joke That Everyone Makes
Now… let’s talk about the joke that comes up in literally every luxury deal.
Buyer:
“So what if I buy the house for $2.99M and then just pay the seller $500K for their furniture?”
Seller:
“I do have a very special couch…”
Everyone laughs.
The lawyers glare.
The accountants start twitching.
Yes — in theory — you can allocate value to chattels (furniture, art, light fixtures, etc.).
But no, you can’t suddenly decide that a Restoration Hardware sectional is worth half a million dollars.
Toronto and the province are not stupid.
They review contracts.
They audit deals.
They reassess values.
And “buying very overpriced furniture in cash” is a great way to turn a tax saving into a very expensive problem.
So while we all joke about the $400,000 dining table… please don’t actually try it. Talk to your lawyer. Talk to your accountant. And keep your name off the CRA’s Christmas card list.
The Real Takeaway
The $3M line is no longer just a price point.
It’s a psychological barrier. It’s a negotiation weapon. It’s a closing-cost shock for buyers who didn’t do the math.
And it’s why smart buyers are structuring offers carefully, negotiating harder, and watching every dollar once a home starts flirting with that number.
Because in Toronto real estate, the difference between $2.99M and $3.01M is no longer just $20,000.
It’s a lifestyle upgrade for the City of Toronto.
There are plenty of great homes under the 3m mark I’ve got cooking up for the new year. Please get in touch if you’re in the market.
