Aimed at restoring semblance of affordability in certain area of the province, the Ontario government has introduced a tax on purchase of residential properties by foreign buyers as part of 16 measures introduced under Ontario’s Fair Housing Plan. Essentially, NRST is a 15% tax on the purchase price of residential property located in the Greater Golden Horseshoe Region, which includes geographical areas of Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York. Tax is aimed at purchasers who are not citizens or permanent residents of Canada and apply to transfer agreements signed on or after April 21, 2017, as well as assignments, even if the original agreement was signed before April 21.
Curiously, the tax applies to transfer of land which contain at least 1 but only up to 6 single houses, town houses, or condominiums, as well as duplexes to sixplexes, totaling maximum 6 units. Tax does not apply to multi-unit residential properties like apartments. To circumvent avoidance, when the acquisition is made by a group of individuals which include at least one foreign national, NRST applies to the entire purchase price and all purchasers who are part of the group are jointly liable for the tax. There are additional provisions to tax only the residential portion of the total purchase price of a mixed usage property (i.e. – commercial unit with 2nd floor apartments).
Exemptions may be granted to refugees, nominees under Ontario’s skilled labor immigration program and spouses of citizen and permanent residents of Canada. Rebates of tax paid may be available to those who eventually become permanent residents, international visa students and those workers possessing valid work permit. Eligibility for exemptions and rebates is based on several, very specific criteria and conditions. The purchaser also must certify that the property will be occupied as a principal residence and/or actually reside in the property so designated.
For the time being, NRST must be prepaid at the Ministry of Finance office in Oshawa and without the receipt number, electronic transfer of the property cannot be registered. In the future, it is anticipated that the payment will be processed through the Teraview system which currently administers the payment of land transfer tax.