The Government of Ontario has announced amendments to the Non-Resident Speculation Tax (NRST).
As of March 30, 2022, the NRST rate will be increased from 15% to 20% and will be expanded to all regions of the province. The NRST applies to the transfer of “designed land”, which is considered land that contains at least one and no more than six single family residences.
The NRST will continue to apply to individuals who are not Canadian citizens or permanent residents of Canada or by foreign corporations or taxable trustees.
Note: The NRST applies if any one of the transferees is a foreign entity or taxable trustee, regardless of their share of ownership. For example, if a transfer of residential property is made to four transferees, only one of which is a foreign entity, the NRST would apply to 100 per cent of the value of the property.
Certain individuals will continue to be exempt from the NRST, including foreign nationals in the Ontario Immigrant Nominee Program, protected persons (refugees), spouses of Canadian citizens, or permanent residents of Canada.
Increasing the tax rate to 20% and expanding the tax to apply provincewide is an attempt by the Government of Ontario to deter non-resident investors from speculating in the housing market in hopes that home ownership will become more attainable for Ontario residents.
What does this mean for Ontario REALTORS® and your clients?
If an agreement of purchase and sale was entered into for the conveyance of land located outside the Greater Golden Horseshoe (GGH) (or the assignment of such an agreement) on or before March 29th, 2022, there is no NRST payable.
As of March 30th, 2022 the NRST is applicable province wide.
The tax applies to all transfers of residential property that contains at least one and not more than six single family residences. This includes detached homes, semi-detached, triplexes, duplexes, townhouses and condominium units. It does not matter whether a single family actually resides there nor whether the property is rented or occupied by the owner; it remains taxable so long as it was designed for a occupancy as the residence of a family.
The NRST does not apply to other types of land such as land containing multi residential rental apartment buildings with more than six units, agricultural land, commercial land or industrial land.
OREA encourages you to visit the Government of Ontario’s NRST webpage for details regarding the transition provisions for the tax rate, the international student rebate, and the foreign workers rebate.
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