Case study: Property Transfer Tax (PTT) Prof. Jadhav Babasaheb R Assistant Professor, MAEER's, MIT College of Engineering's-CMSR, Kothrud, Pune, Maharashtra, India Online published on 12 May, 2017. Abstract ‘A transfer tax is a tax on the passing of title to property from one person (or entity) to another’. This kind of tax is typically imposed where there is a legal requirement for registration of the transfer, such as transfers of real estate, shares, or bond. Examples of such taxes include some forms of stamp duty, real estate transfer tax, and levies for the formal registration of a transfer. As we are aware that, real estate industry is at boom (pick) level, PTT is already implemented by many countries and earning high revenue, if state government implements PTT, it will generate high revenue to state governments. A property transfer tax would allow local government to capture some of the increase in land value each time a property is sold. It is an efficient way of capturing a small percentage of the increase in land value. How PTT generate revenue for British Columbia- The provincial property transfer tax is budgeted to bring in $900million in revenue for the provincial government in the 2010–2011 fiscal year. The tax is applied to the sale of each property at a rate of one per cent on the first $200, 000 in value, and two per cent of the value greater than $200, 000. The revenue generated by this tax is very closely correlated with the fluctuations of the real estate market. As real estate values in British Columbia have climbed steadily in recent years, the property transfer tax has become a larger contributor to government revenues. The City of Toronto has recently introduced a similar tax called the municipal land transfer tax (MLTT). As of February 2008, the Toronto began to collect the MLTT under the legislative authority given to it by its provincial government under the City of Toronto Act, 2006. The tax is calculated on detached houses at a rate of 0.5 per cent on the first $55, 000 in value, rising to 1 per cent of the value between $55, 001 and $400, 000 and 2 per cent of the value over $400, 000. For commercial property and multi-family residential properties, the rates are somewhat lower with the portion over $400, 000 taxed at a rate of 1.5 per cent and any value over $40 million taxed at 1 per cent. In the 2009 fiscal year, the MLTT raised $184million, over two per cent of Toronto's $8.7billion operating budget. Conclusion of Case: As we were aware about that the real estate industry is at boom (pick) level, PTT is already implement by many countries and earning high revenue, if any state governments implement PTT, it will generate high revenue to state governments. Top |