New Changes to Ontario Land Speculation Taxes
On March 30, 2022, the Ontario Provincial Government announced changes to the rules for when a property is purchased in Ontario by a non-resident. The change enacted by the province increases the tax payable from 15% to 20% of the purchase price. I have received a lot of questions from realtors and clients alike and wanted to provide the main things you need to know about the rule change. Here are 6 things you need to know about the new changes to Ontario Land Speculation Taxes:
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1. What property is now subject to this tax?
Prior to March 30, 2022, the tax was only payable by a non-resident buyer who purchased a residential property, from 1-6 units, in the Golden Horseshoe area of Ontario. This tax now applies to every property purchased in Ontario, where the agreement of purchase and sale was signed starting March 30, 2022.
2. Who pays the tax?
The tax is payable by anyone who is not a Canadian citizen or permanent resident of Canada. So if you are a Canadian citizen who does not live in Canada, you do not have to pay this tax.
3. What if the non-resident just owns 1% of the property on closing?
If the property costs 1 million dollars, the tax payable will be 20% or $200,000. Even if a Canadian citizen takes 99% ownership and the non-resident takes 1%, the tax payable is still $200,000.00
4. Is anyone exempt from paying the tax?
If you are a non-resident who is married to a Canadian citizen and you are buying the home together to live in as your primary residence, then no tax is payable. There are also exemptions if you have achieved refugee status in Canada or have been nominated under the Provincial Immigrant Nominee program.
5. Can I apply for the tax back after I pay it?
A non-resident is eligible for a rebate of the 20% tax paid if they become a permanent resident within 4 years of the closing date. But there is a deadline. You must apply for the rebate within 90 days of your becoming a permanent resident, or you lose it.
6. What if I am a non-resident here on a work permit or I am a foreign student buying a property?
You can no longer apply for a rebate in either situation if you buy a property starting March 30, 2022. However, If you bought the property before March 30, 2022, then for the non-resident here on a work permit, you can apply for a rebate if you are still working under the same work permit at least 1 year after closing, or if you purchased as a foreign student before March 30, 2022, you can apply for the rebate if you are still attending a Provincial University or College for 2 continuous years after closing.
At our law firm, we do every part of a transaction safely, whether it is signing documents through a video conference, transferring funds to our trust account digitally through a bill payment and arranging lockboxes on closing for the keys. If you have any questions about the Land Speculation Taxes or need assistance closing any real estate agreement, please contact me at [email protected] or toll-free at 1-888-876-5529