British Columbia and Ontario are the only provinces to have enacted a foreign buyers tax in Canada. The tax applies to foreign individuals who buy a property in these provinces. In Ontario, it is also commonly known as the Non-Resident Speculation Tax (NRST). But, there are many aspects of the foreign buyer’s tax that you should know.
Keep reading to find out!
What Is It
Real estate prices in Ontario have grown at a record pace over the past several years. The increases have priced many hopeful homeowners out of the market. To help keep prices in check, the foreign buyer’s tax was designed to limit foreign investment in real estate, especially speculative investments.
How It Works
Under the NRST, foreign nationals, or individuals who are not Canadian citizens or permanent residents of Canada, who are purchasing property in the Greater Golden Horseshoe Region, must pay an extra 15% property transfer tax. The NRST does not factor into any other taxes you may have to pay during the process of buying a property.
Pros & Cons
Foreign buyers taxes help BC and Ontario lower the demand for new homes, which reduces upward pressure on home prices. However, foreign buyers will find it more difficult to buy into the BC and Ontario markets, even for non-speculative reasons.
There are some exemptions from the foreign buyer’s tax. These include being a confirmed B.C. or Ontario provincial nominee, purchasing a property on behalf of a Canadian-controlled limited partnership, or becoming a Canadian citizen or permanent resident within one year of buying the property. Foreigners who meet the above requirements may be able to avoid the NRST.
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