Tax Realty Consultant

t’s an offer many may not be able to refuse. The Bank of Montreal is offering to pay the new Toronto land transfer tax for customers who use the financial giant to arrange a mortgage.The city of Toronto voted in the controversial new levy in October, after months of delay. It was the focus of bitter acrimony, because it would increase the cost of owning a home for first time buyers by thousands of dollars. It kicks in during the New Year, forcing many to hurry their decision about whether they can really afford a residence.

But now the BMO is offering to cover the cost of the new tax up to 1.5% of the mortgage on five year fixed terms. Buy a property worth $400,000 after February 1st and the bank will help pay off the $3,700-plus the city will ding you for. Get a property worth $300,000 and the institution will cover the whole thing.

“It’s important that Toronto homeowners don’t feel pressured into making a purchase decision based on this new tax,” avers BMO V.P. Cid Palacio in a statement.

Like most things involved with money and taxes there is one catch. The offer is only good until February 29, 2008, giving harried homebuyers some extra breathing room to work out their finances.

It’s the latest salvo in a war for your business. Last September, the CIBC announced it was going to be opening select branches in Toronto on a Sunday for those who needed help from tellers and couldn’t do their normal banking via the ABM. TD-Canada Trust responded by extending its own hours on Saturdays.

It’s good news overall for consumers, the only ones who don’t go by so-called ‘banker’s hours.’

But… everything is not always as it seems…

Fact: BMO will rebate upto 1.5% for the Toronto Land Transfer Tax provided the client takes a 5 year fixed rate at 6.35%.

Fact: Client does not have an option for a variable product

Fact: On a $300,000 mortgage the 0.46% premium results in paying approximately $6,800 more in interest over today’s best rate of 5.89% and after the rebate of $3,725 still pays $3,175 more over the term

Fact: If you don’t go to full term, the rebate gets CLAWED BACK

Be informed, understand the program and advise your clients it is not in their best interests to take advantage of this program.