A chronic national housing shortage is exacerbating Canada’s affordability crisis, particularly in Ontario, with home prices surging to record highs seemingly overnight.
The Government of Ontario has announced several legislative and regulatory changes to make homeownership more attainable for Ontario residents. These changes include three key amendments to the Non-Resident Speculation Tax (NRST) that will make buying property in Ontario more costly to foreign entities.
Ontario’s Non-Resident Speculation Tax (NRST)
The Non-Resident Speculation Tax (NRST) is a tax on the purchase or acquisition of an interest in residential property by individuals who are not citizens or permanent residents of Canada or by foreign corporations/entities or taxable trustees.
The NRST applies to the transfer of “designed land,” which is land that contains at least one but no more than six single-family residences, including:
- detached and semi-detached homes;
- duplexes and triplexes;
- townhouses and condominium units.
It does not apply to other types of land, including:
- land containing multi-residential rental apartment buildings (more than six units);
- commercial land and industrial land;
- agricultural land.
Additionally, it doesn’t matter whether a single-family resides on the property or if the owner occupies the property – if the property was designed as a residence for a family, it’s taxable. This means now could be a great time to start looking at investment opportunities in commercial land and industrial property in Ontario.
Key Changes to the Non-Resident Speculation Tax (NRST)
Effective March 30th, 2022, the following amendments will take effect:
- The NRST rate will be increased from 15 percent to 20 percent of the purchase price in addition to the general Land Transfer Tax (LTT) in Ontario.
- The NRST will be expanded from the Greater Golden Horseshoe (GGH), the urban region centred around the City of Toronto, to all regions across Ontario.
- Rebates for certain foreign students and foreign workers in Ontario under the previous NRST structure will be eliminated for any agreements signed on or after March 30th, 2022.
Note: The Non-Resident Speculation Tax (NRST) is not applicable to purchase agreements outside of the Greater Golden Horseshoe Region (GGH) that were signed on or before March 29th, 2022.
Who has to pay the Non-Resident Speculation Tax (NRST)?
The Non-Resident Speculation Tax (NRST) applies to individuals who are not Canadian citizens or permanent residents of Canada or by foreign corporations or taxable trustees. Foreign nationals in the Ontario Immigrant Nominee Program, protected persons (refugees), spouses of Canadian citizens and permanent residents of Canada will continue to be exempt from the NRST.
IMPORTANT❗ The NRST applies if any one of the transferees is a foreign entity or taxable trustee, regardless of their share of ownership. This means that if a transfer of residential property is made to four transferees, only one of which is a foreign entity, the NRST will apply to 100 percent of the value of the property.
If it sounds complicated, it’s because it can be. Make sure you’re dealing with an experienced and trustworthy Commercial Realtor so you can avoid any unpleasant and costly surprises on closing day.
The Squarefoot Difference
Buying property in Ontario has never been more complicated or more challenging. An experienced Commercial Realtor with knowledge of local markets and the community, a strong network and reputation is an indispensable tool for both Buyer and Seller in one of the world’s hottest real estate markets.
Squarefoot Commercial Realtors have been committed to serving, developing and creating opportunities in the Greater Golden Horseshoe Region for more than 40 years. We are known for our infallible knowledge of the market, negotiation skills and integrity, and we can prepare you for the reality of purchasing a commercial property in Ontario today. Ready to invest in commercial real estate in Ontario? Contact Squarefoot Commercial Group today.