Ontario’s hot real estate market has definitely felt the effects of the foreign buyer tax that went into effect last year. Despite the widespread discussion around it, many are still unsure what exactly is covered in it. If you are a foreign buyer looking to make a real estate investment in the Greater Toronto Area, here is what you need to know.
What Is It?
It is most commonly referred to as the Foreign Buyer Tax, but officially it is called the Non-Resident Speculation Tax (NRST). The NRST is a 15% tax added to the purchase or acquisition of a residential property by individuals who are not a citizen or permanent resident of Canada.
What Areas Are Covered Under It?
The good news for buyers looking to purchase property in Ontario is that the entire province is not covered by this tax. The bad news is that all residential properties in the Greater Golden Horseshoe Region (GGH) are covered by this tax. For those who do not know, the GGH includes the following areas:
- City of Barrie
- County of Brant
- City of Brantford
- County of Dufferin
- Regional Municipality of Durham
- City of Guelph
- Haldimand County
- Regional Municipality of Halton
- City of Hamilton
- City of Kawartha Lakes
- Regional Municipality of Niagara
- County of Northumberland
- City of Orillia
- Regional Municipality of Peel
- City of Peterborough
- County of Peterborough
- County of Simcoe
- City of Toronto
- Regional Municipality of Waterloo
- County of Wellington, and
- Regional Municipality of York.
What Types Of Properties Are Covered?
Right now the foreign buyer tax only includes residential properties. More specifically, it covers land that contains at least one and not more than six single-family residences. This includes properties such as detached houses, semi-detached houses, townhouses, or condo units. The NRST does not apply to other types of property such as multi-residential rental apartment buildings (with more than six units), agricultural land, industrial land, or commercial land.
Who Does The Tax Apply To?
The foreign buyer tax, as implied by the name, is applied to individuals that are foreigners to Canada. Anyone that is not a citizen or permanent resident of Canada is subject to this tax. There are a few exceptions though. For example, an individual nominated under the Ontario Immigrant Nominee Program would not be subject to the tax. Protect refugees under the Immigration and Refugee Protection Act are also exempt.
Spouses of Canadian citizens or permanent residents who jointly purchase a property are also exempt from the NRST. However, in this case, the foreign national and their spouse must certify they will occupy the property as their primary residence. The foreign national must also purchase the property with their spouse that is a Canadian citizen/permanent resident. If they purchase the property on their own they are not exempt from the tax.