Exemptions to Ontario’s Non-residential Speculation Tax

The Ontario government recently announced a 15 per cent tax on foreign buyers.

However, the tax will have exemptions for skilled workers enrolled in provincial programs and refugees. Anyone obtaining a permanent residency or Canadian citizenship within four years of purchasing their home would receive a full rebate of the NRST. International students enrolled full-time for at least two years would receive a full rebate.

Queen’s Park also agreed to a request from Toronto Mayor John Tory to crack down on vacant homes, a perceived problem in the city. Toronto, along with other municipalities, will soon have the power to impose a tax on vacant homes.

“(The measure) will encourage owners to sell or rent their unoccupied units,” said Charles Sousa, the provincial finance minister.

Municipalities will be allowed to provide a higher tax on service land approved for development, something the government thinks will help spur housing development of vacant lots.

Ontario will also crack down on assignment clauses, the practice which allows a buyer who hasn’t closed a purchase to pass on the right to buy a property. “There are speculators who enter into agreements to purchase property with no intention of buying them or living them, crowding out families who want to buy their own home,” said Sousa.

He believes those “scalpers” are avoiding tax “and should pay their fair share” so the government will now be demanding full disclosure, if a property has been transferred through an assignment clause.

The government wants to make sure the land transfer tax is being paid and plans on working with the Canada Revenue Agency to pass on information it gets from its crackdown on assignment clauses.

Queen’s Park also has plans to review the real estate industry, checking on practices such as double ending where a realtor represents the buyers and the seller. “We’ve heard about fake bidding so we want to modernize the rules,” said Sousa.