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