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The Ontario Government will introduce a 15 percent Non-Resident Speculation Tax on purchases of residential property in the Greater Golden Horseshoe region.
According to the Government, the NRST will help to address unsustainable demand in the region. Toronto is among the areas included in the GGH.
The measure forms part of the Government's 16-point Fair Housing Plan. The NRST will affect non-Canadian residents, non-permanent residents, and non-Canadian corporations.
The proposed tax will apply to transfers of land that contain at least one and not more than six single family residences. Such residences include detached and semi-detached properties, townhomes, and condominiums. It will not apply to transfers of other types of land, including multi-residential apartment buildings, agricultural land, or commercial/industrial land.
Refugees and nominees under the Ontario Immigrant Nominee Program will not be subject to the NRST. A rebate will be available for those who subsequently attain citizenship or permanent resident status, as well as foreign nationals working in Ontario and international students.
If passed, the NRST will be effective as of April 21, 2017.
The provincial Government will also introduce legislation to allow the City of Toronto, and potentially other interested municipalities, to introduce a vacant homes property tax to encourage property owner to sell unoccupied units or rent them out.
The Government said it will also work to better understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market. It will partner with the Canada Revenue Agency to explore more comprehensive reporting requirements, to ensure that correct federal and provincial taxes, including income and sales taxes, are paid on real estate purchases and sales in Ontario.
In addition, it will seek to ensure that property tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties.
Average house prices in the Toronto region reached CAD916,567 (USD680,809) in March 2017, up 33.2 percent on the previous year.
Ontario is the second Canadian province to introduce a tax on foreign buyers. An additional property transfer tax is applied at 15 percent on residential property transfers to foreign entities in the Greater Vancouver Regional District. The measure has been in force since August 2016.
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