Non-Resident Speculation Tax: What You Need To Know
Thanks to the Rural Northern Immigration Pilot Program (RNIP), Thunder Bay has more new immigrants moving here than in many years. As a result, the real estate industry here is experiencing a need for growth. Some professionals are not aware of the challenges associated with buying real estate in Ontario as a Non-Resident. At Larson Lawyers we keep up to date with changes in the industry. We also do our best to present that learning to you in these blogs!
Real Estate Agents and lawyers alike are seeing new issues arise. Taxes are a big difference between purchasing property as a Citizen or permanent resident versus as a foreigner. Foreign purchasers must now pay a 20% withholding tax.
Non-Resident Speculation Tax On Real Estate Purchases
That withholding tax is called "Non-Resident Speculation Tax" (NRST). As of March 30, 2022, it applies to the entire province of Ontario. The amount has also increased from 15% to 20%. Prior to March 30, 2022, the 15% tax only applied in a specific area of Southern Ontario known as the Greater Golden Horseshoe. A “foreign national” is defined as an individual who is not a Canadian Citizen or Permanent Resident of Canada.
This means that if you are not a Canadian Citizen or Permanent Resident of Canada, you will have to pay the NRST to the Government of Ontario. There are extremely limited exemptions to the NRST. Living or working in Ontario on a work visa, student visa, or temporary work permit is not sufficient to avoid the tax.
How Much Tax Will Foreign Buyers Pay In Thunder Bay?
The Thunder Bay Real Estate Board found that the median sale price for a single detached home in Thunder Bay thus far in 2022 was $330,000.00. The NRST on such a purchase comes in at $66,000.00.
The Buyer will have to come up with this extra cash on closing in order to close the purchase. If the tax applies and you do not have the funds, you will be in breach of your Agreement of Purchase and Sale. This could open you up to a substantial amount of liability.
Get Help Planning Your Home Purchase In Ontario
If you have any questions about whether or not the NRST will be applicable to your purchase, please contact us. We will need to meet with you and obtain some information about your immigration status here in Canada. Getting an opinion before hand can save you a substantial amount of time and money.