What is the Non-Resident Speculation Tax?
The Non-Resident Speculation Tax (NRST) is a 15 percent tax imposed on the purchase or acquisition of a residential property located in the following communities: Brant, Dufferin, Durham, Haldimand, Halton, Niagara North, Niagara South, Northumberland, Peel, Peterborough, Simcoe, Toronto, Victoria, Wellington, Wentworth, and York. These communities comprise what is known as the Greater Golden Horseshoe Region (GGH). This tax only applies to purchasers that are (1) foreign nationals, (2) foreign corporations, and/or (3) taxable trustees. The tax does not apply to Canadian permanent residents.
The NRST applies to residential properties containing at least one, but not more than six, single family residence(s). Examples of single-family residences include fully detached homes, semi-detached homes, townhouses, condominiums, and apartment units. Examples of residential properties containing more than one family residence include duplexes, triplexes, fourplexes, etc. For more general information and frequently asked questions about the NRST, please the consult the Ministry of Finance Bulletin.
What is the Purpose of the Non-Resident Speculation Tax?
The real estate market in Ontario for the last several years has been characterized by significant price increases for residential homes. The purpose of the NRST was to adjust the real estate market in Ontario and provide affordable housing by discouraging foreign speculators and purchasers of residential real estate in the GGH area.
Am I Liable for the the Non-Resident Speculation Tax?
This tax is relatively new, and was introduced in April of 2017, which means if you purchased a property on or before April 20, 2017 and did not assign it to another person after April 20, 2017, you are not subject to the NRST.
How Can I get a Refund of the Non-Resident Speculation Tax?
There are three situations where a rebate may be available:
- becoming a permanent resident within four years of purchasing your property;
- having a work permanent for at least a year from the purchase of the property; or
- being a full-time student for at least two years after the purchase of the property.
You will still be required to pay the tax upon purchase or acquisition, but you may seek a rebate at a later late. No application may be made more than four years and 90 days from the date the NRST became payable. To qualify for a rebate, the foreign national must exclusively hold the property, or hold the property exclusively with his or her spouse. All rebate applications must be made using the Ontario Land Transfer Tax Refund/Rebate form for NRST. Supporting documentation will be required to substantiate all applications for rebates.
In accordance with the NRST, the law now requires purchasers to disclose information to the government regarding their residency, citizenship, and intentions for the purchased property. Incorrectly disclosing a purchaser’s residency can result in monetary penalties and/or tax assessments. When seeking to purchase real estate in international markets, it is imperative to seek advice from local professionals. Non-resident buyers need to understand whether the NRST is applicable to their purchase.
If you have paid the NRST, and are looking to apply for a rebate, give us a call for a free consultation to make sure you are getting the right legal representation!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.