In 2017, the Ontario Provincial Government implemented a Non-Resident Speculation Tax ("NRST"), for foreign home buyers. Currently, the tax rate is set at 15% on a purchase or acquisition of interest in residential property located in the Greater Golden Horseshoe Region . Under certain circumstances, Foreign Nationals may be eligible for a rebate on the NRST.
Generally, NRST is payable by Foreign Nationals who do not meet an exemption. In most situations, Canadian citizens and Canadian Permanent Residents are exempt from this tax. However, even if a party is a Canadian citizen or Permanent Resident or a Foreign National who meet an exemption, NRST will still be payable if that party purchases or acquires interest in a property with other parties who are Foreign Nationals and who do not meet an exemption. Simply stated, if one party meets the exemption, but the other party does not meet the exemption, NRST is still payable. There is no reduction in the amount of NRST payable based on the amount of interest a Foreign National (who does not meet an exemption) acquires, even if their interest in the property is 1%.
Foreign Nationals who had to pay NRST on a recent real estate transaction may be eligible for a full rebate. A Foreign National may qualify for a rebate:
- If they become a Permanent Resident of Canada within four years of the date of the purchase or acquisition (the "Closing Date" of their purchase).
- If, after the closing date, they are a student enrolled in full-time1 education continuously for two years or more in an "approved institution"2 at a campus located in Ontario or
- If, after the closing date, they are legally working in Canada, full-time3 and have worked continuously for a period of one year or more, under a valid work permit.
In addition to the above criteria, the Foreign National must have:
- exclusively held the property, or hold the property exclusively with his or her spouse, during this period;
- occupied the property as their (and if applicable his or her spouse's) principal residence from within 60 days after the Closing Date to the date they meet the qualifications; and,
- applied for the rebate for within four years after the Closing Date, or if the Foreign National becomes a Permanent Resident of Canada, the Foreign National must have applied within four years and 90 days after the Closing date.
Rebate applications are made using the Ontario Land Transfer Tax Refund/Rebate form for NRST along with all supporting documentation required to substantiate application for rebate.
If you are in the market to purchase a home in Ontario and are unsure whether you will be required to pay NRST or are eligible to obtain the rebate, we recommend obtaining legal advice.
1 A full time student is a student enrolled in 60% or more (40% if the individual has a disability) full course load as defined by that institution for the academic year.
2 Under section 8 of Ontario Regulation 70/17 of the Ministry of Training, Colleges, and Universities Act
3 Full-time work is considered to be a minimum of 30 hours, or more, of paid work per week over a 12 month period, with a total of 1,560, or more, of paid work over that period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.