Canada: Increase in non-resident home buyers tax (Ontario)
The province has increased the tax to 25% (from 20%) of the purchase price for the transferred property.
Ontario has increased the tax to 25% (from 20%) of the purchase price
Ontario has increased its non-resident speculation tax that applies to certain foreign buyers of Ontario homes. The province has increased the tax to 25% (from 20%) of the purchase price for the transferred property, as of 25 October 2022.
The non-resident speculation tax is in addition to Ontario’s land transfer tax that generally applies to the purchase of residential properties. The non-resident speculation tax applies to all residential properties across Ontario that are purchased by foreign nationals, foreign corporations, and taxable trustees.
The province has also provided a transitional rule for taxpayers that undertake certain property transfers for which they entered into an agreement of purchase and sale on or before 24 October 2022.
The increased non-resident speculation tax rate is payable from 25 October 2022, even though Ontario’s electronic land registration system (which collects the tax) will not reflect the rate increase until 28 October 2022. The province has provided processing instructions to make the payment during this transitional period on its website.
Background
Ontario's non-resident speculation tax is payable when a foreign national, foreign corporation, or a taxable trustee (i.e., a trustee of a trust with either a foreign trustee or a foreign beneficiary) purchases or acquires designated land in Ontario. The tax is now 25% of the value of the consideration for the designated land. Designated land is generally land that contains at least one and not more than six single family residences.
The tax does not apply to a trustee of the following types of trusts:
- A mutual fund trust
- A real estate investment trust (REIT)
- A specified investment flow-through trust (SIFT trust)
Ontario also exempts the following individuals from the tax if certain conditions are met:
- Protected persons under the Immigration and Refugee Protection Act (Canada)
- Nominees under the Ontario Immigrant Nominee Program
- Purchasers who jointly acquire the designated land with a spouse who is a Canadian citizen, permanent resident of Canada, protected person or nominee.
For property transfers that occur after 29 March 2022, the non-resident speculation tax rebates are available for foreign nationals who become permanent residents of Canada within four years of purchasing or acquiring their home, when certain conditions are met.
Read an October 2022 report prepared by the KPMG member firm in Canada
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