How Ontario’s Non-Resident Speculation Tax Affects You…

Over the past ten years, Ontario’s real estate market—especially in cities—has seen notable price rises. The Ontario government instituted the Non-Resident Speculation Tax (NRST) to solve affordability problems and reduce speculative buying by non-residents. This blog entry will clearly explain the NRST together with the applicable requirements and exceptions.

Calculate the non-resident speculation tax

The NRST is a 25% tax charged on the entire purchase price at the time of the purchase of a residential property situated anywhere in the Province of Ontario by non-citizens or permanent residents of Canada. This tax covers the entire worth of the consideration for the residential property transfer. It is different from the non-Canadian prohibition at the federal level, and the criteria are very different.

NRST’s Criteria

Examining the factors that characterize a non-resident will help one to grasp who the NRST affects:

·         The primary determinant of the NRST is the buyer’s residence status. The tax applies to those who are not permanent residents or citizens of Canada.

·         Location of Property: The NRST covers residential properties in the entire Province.  It started only in the Greater Golden Horseshoe (GGH) area, comprising cities like Toronto, Hamilton, Niagara, and their environs, but now location doesn’t matter.

·         Type of Property: Purchases of single-family homes, semi-detached houses, townhouses, and condominiums pay the tax. It does not apply to agricultural property, commercial buildings, or multi-residential apartment buildings, including more than six units.

Exceptions and Returns

Although the NRST is generally applicable, consumers should be aware of many exceptions and possible rebates based on the following:

·         Becoming a citizen or PR: If you become a Canadian citizen or permanent resident after buying the house, you can qualify for an NRST refund.

·         Protected Persons: Those identified as Immigration and Refugee Protection Act refugees could qualify for an NRST rebate.

·         Spouse: Should a property be purchased jointly with a spouse who is a Canadian citizen, permanent resident, or protected person, the NRST does not apply.

·         Commercial and Multi-Residential Properties: As noted, multi-residential apartment buildings with more than six units are not covered by the NRST nor commercial properties.

In conclusion

Anyone wishing to participate in Ontario’s real estate market has first to grasp the Non-Resident Speculation Tax. Although the tax increases expenses for non-residents, it seeks to make homes more reasonably priced for occupants. Knowing the criteria and exclusions will enable consumers to decide wisely and save money using the offered rebates.

*It is important to consult a lawyer as the exceptions are fact specific*

Contact Droit Ouimet-McPherson Law with any questions that you may have about real estate in Ontario and the NRST

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