The start of 2017 for Ontario’s real estate market was boiling hot. After a few short months of bidding wars, frustrated buyers and some of the highest selling prices seen to date, the heated market reached its breaking point.
On April 20, 2017, the Ontario government announced 16 policies changes in an attempt to cool the hot housing market. The policies covered various city concerns including vacancy taxes and rent controls, however, the policy that garnered the most attention was a 15% non-resident speculation tax (NRST).
What does the 15% NRST mean for Toronto real estate purchases?
Any person or corporation that isn’t a permanent resident or classified as a non-citizen of Canada must pay an additional 15% tax on top of the purchase price.
Why did the Government create the 15% NRST?
The goal of the Ontario Government implementing a tax for non-resident buyers was to help create a more predictable real estate market for permanent Ontario residents.
The province of British Columbia passed a similar foreign tax policy a year earlier to help cool its heated market, which proved successful.
Before this tax came into play, the real estate market posed an unfair disadvantage to permanent residents purchasing property across the province. Canadian currency and resident incomes faced trouble competing against foreign exchange.
How has the 15% NRST changed the market?
Since implementing the NRST the number of foreign real estate transactions has dropped in almost all municipalities of the Greater Golden Horseshoe. The image below highlights the percentage of properties purchased by foreign buyers, by area.
Who is or can be exempt from Ontario’s Foreign Buyers Tax?
There are a few exceptions and rebate options for foreign buyers when investing in Ontario real estate.
Nominees - An international person who has applied for permanent residency under the Ontario Immigrant Nominee Program.
Protected person - An international person who is a protected landed immigrant and/or refugee under the Immigration and Refugee Protection Act of Canada.
Spouse - An international person who is purchasing a property with a spouse who is a Canadian citizen.
To qualify for an NRST rebate a foreign buyer must comply with one of the following situations:
An international person who becomes a permanent resident - A person that becomes a permanent resident within a four year period of property sale.
An international student - Foreign students enrolled in at an Ontario college or university for a full-time program for a minimum of two-years from the date of purchased real estate.
An international worker - A foreign worker who works on a full-time basis with a valid working permit for a minimum of one year from the date of purchased real estate.
Interested in learning more about Ontario’s Non Resident Buyer Tax, visit the Ontario Ministry of Finance website bulletin board.