In an effort to manage the out-of-control prices facing home buyers in the Greater Golden Horseshoe (GGH), the Provincial Government of Ontario recently introduced “The Fair Housing Plan”, which includes several measures that will be taken to encourage affordable housing for Ontario residents. One of these measures is the Non-Resident Speculation Tax (NRST). The NRST is a 15 percent tax on non-Canadian citizens, non-permanent residents and non-Canadian corporations buying residential properties in the GGH. The tax, which was implemented on April 21, 2017, is designed to offer Ontario residents – particularly those in the Toronto area – some relief from constant bidding wars and pre-emptive offers. The NRST will apply in addition to the general land transfer tax in Ontario.
Greater Golden Horseshoe Hotspot
In the GTA, where there is an unsustainable demand for homes, prices have shot up by 33% in the last year — with neighbouring communities also reporting massive price increases. Ontario Premier, Kathleen Wynne, has described this current market as a “frenzy” that needs to be calmed, and is hopeful that the new tax will help free-up properties that are being purchased on speculation that they can be resold – or “flipped” – for a much higher profit. This same network of speculators is also avoiding taxes by classifying the properties they buy as principal residences.
What Type of Property Will Be Subject To The Tax?
The NRST applies to land transferred containing at least one and not more than six single family residences. Dwellings included are: detached houses, semi-detached houses, townhouses and condos. It does not apply to multi-residential rental apartment buildings with more than six units, or agricultural, commercial or industrial land.
What Areas Are Included?
The NRST applies to homes purchased in the Greater Toronto Area and surrounding geographic areas. These include: Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York.
Exceptions & Rebates
Refugees and nominees under the Ontario Immigrant Nominee Program would not be required to pay the NRST. A rebate would be available for those who subsequently attain citizenship or permanent resident status as a well as foreign nationals working in Ontario and international students.