UPDATED: New Changes announced Effective March 30, 2022. See our updated Blog Post for everything you need to know about the current regulations

What is the Foreign Buyer’s Tax?

The Foreign Buyer’s Tax, officially named the Non-Resident Speculation Tax, (NRST) is a 15% tax foreign nationals must pay on real estate purchased within specific areas in Ontario. It is not meant to dissuade new Canadian residents from buying homes (more on rebates and exemptions later in the post).

Introduced in 2017, the NRST is part of an initiative to stabilize the housing market in the GTHA (Greater Toronto Hamilton Area). The Canadian Government put the tax in place to make it less attractive for those living and working outside of Canada to purchase investment real estate within the area, to help prioritize home ownership for Canadian residents.

Who Pays the Ontario Foreign Buyers Tax?

Foreign Nationals

This term applies to anyone who is not a Canadian citizen or permanent resident of Canada. Anyone living in another country buying residential property will be subject to the Foreign Buyer’s Tax in the specific areas.

Foreign Corporations

Both companies incorporated outside and inside of Canada but controlled by foreign nationals, could be liable to pay the tax.

Taxable Trustees

A taxable trustee refers to a trust that has at least one trustee that is a foreign entity.

Where in Ontario does the Foreign Buyer’s Tax Apply?  

Despite the name, the Ontario Foreign Buyer’s Tax does not include the entire province but is limited to a section centered around Toronto, known as The Golden Horseshoe.

The Golden Horseshoe covers all major cities and towns that fall within the following municipal regions and Cities:

Durham (Pickering, Ajax, Whitby, Oshawa, Bowmanville)

Haldimand & Brant (Brantford, Simcoe)

Halton (Burlington, Oakville, Milton, Georgetown)

Hamilton (Hamilton, Ancaster, Dundas, Stoney Creek, Waterdown)

Niagara (Niagara Falls, St. Catharines, Welland, Niagara on the Lake, Fort Erie)

Peel (Mississauga, Brampton, Caledon, Bolton)

Peterborough, Northumberland & Kawartha Lakes (Port Hope, Coburg, Lindsay, Peterborough)

Simcoe (Barrie, Orillia)

Toronto (Toronto, Etobicoke, Scarborough, North York)

Waterloo (Kitchener, Waterloo, Cambridge)

Wellington & Dufferin (Guelph, Orangeville)

York (Aurora, Newmarket, Richmond Hill, Markham, Vaughan)

Who is Exempt from the Tax?

Because the Canadian Government is not looking to dissuade those living and working in Ontario from purchasing property, specific groups may be exempt.

The following groups do NOT have to pay the Foreign Buyers Tax:

• Canadian citizens – living in or outside of Canada
• Permanant Residents – Foreign nationals who who have obtained permanment resident status in Canada (applying for permanent residency does not exempt you from payment though a rebate could apply)
• Nominee – a foreign national who is nominated under the Ontairo Immigrant Nominee Program at the time of the purchase, and the foreign national has applied or certifies that they will apply to become a permanent resident
• Protected Person – a foreign national who has obtained refugee protection
• Spouses – Foreign nationals who jointly purchase property with a spouse who is a Canadian citizen, permanent resident, nominee*, or protected person**.

If you are unsure if you may be exempt from this tax, you can verify at the Ministry of Finance.

Can I get a rebate if I move to Canada?

Yes, you can!  If you pay the tax and become a permanent resident within four years of purchasing the property, you may be eligible for a rebate. This also applies to those who buy a home, pay the tax, and then live and work in Ontario for at least one year under an active work permit or visa.

The following groups are eligible to get a rebate of the Foreign Buyers Tax paid on a purchase:

• Foreign nationals who become permanent residents – successfully become a permanent resident within four years of purchasing the home and you can have your tax rebated back to you. Applying for status does not qualify, you must obtain status to get the rebate. You have 90 days to request the rebate once you become a permanent resident.
• Foreign nationals working in Canada – any foreign national who has worked full time for one year from the date of purchase under a valid work permit in Ontario can apply for a the rebate. Any work period prior to the date of purchase does not count towards your rebate application.
• International students – you must be enrolled full-time for a continous period of at least two years from the date of purchase at an “approved institution”. Any time that you are enrolled prior to the purchase does not count towards your two year period.

To be eligible, you must exclusively (or with your spouse) hold the property and use it as your primary residence within 60 days of your closing date, to the date you apply for the rebate.

Learn how our tailored home-buying process helps you achieve a successful purchase.

Work with a Professional

Because this tax can represent a large sum of money, knowing upfront whether you qualify for an exemption or may qualify for a rebate in the future can significantly impact your choice of when and where to buy.

Having a real estate professional on your side who is familiar with the guidelines around The Foreign Buyer’s Tax can help ensure you don’t pay an unnecessarily costs or face interest charges and penalties.

FREQUENTLY ASKED QUESTIONS

Are there other attractive areas for investors where the tax does not apply?

The tax applies to a large area of Ontario, but there are still attractive cities and towns that are not affected throughout the province. We help our client’s source high performing investment properties in high growth areas where the foreign buyer’s tax does not apply.  This can be a great strategy for foreign nationals that want to get into the local area just in case they decide to move here in the future however are not certain enough on the move to pay the 15% tax and apply for the rebate.

Does the Foreign Buyer’s Tax apply to all real estate in the Greater Golden Horseshoe Region?

No it does not.  This tax only applies to residential land purchases.  If you are a foreign national and would like to invest in non-residential land in the zone outlined reach out to us, you may be in luck.  We specialize in Real Estate in the West GTA and can help.

If I am a foreign national living and working in Ontario, paid the tax and got a rebate on my first home, am I eligible for another rebate on a subsequent purchase?

The rebate is only available for a home occupied as a principal residence. If you purchase a new home and live in it as your principal residence, you can apply for an NRST rebate again if you meet all requirements.  If you are looking for an investment property it would be best to locate that outside of the zone.

I am a Canadian citizen living outside of Canada right now.  Do I have to pay the Non-Resident Speculation Tax?

Any Canadian citizen is exempt from the tax regardless of where they are currently living.  There is confusion here because when the documentation refers to being “not a permanent resident” they refer to the term “permanent resident” as defined by the Immigration and Refugee Protection Act (Canada).  In that sense if you are a Canadian citizen, you are a permanent resident of the country.

My spouse and I are purchasing a home and only one of us is a Canadian citizen, do we have to pay the Foreign Buyer’s Tax?

The status of your relationship is important here.  If you are deemed to be each other’s spouse then there would be no tax owed.  If you are deemed to be partners or if there is another person on title that is not a Canadian citizen then the tax would be owed.  Best to check in with us before you commit to a purchase.

“Spouse” means spouse as defined in section 29 of the Family Law Act. This includes either of two persons who are married to each other, or who are not married to each other and who have cohabited,

• continuously for a period of not less than three years, or
• in a relationship of some permanence, if they are the natural or adoptive parents of a child.

What do I do if I registered and closed a property without prepaying The Foreign Buyer’s Tax?

Penalties and interest will apply to non-payment of the tax. Under the Voluntary Disclosure Policy, the ministry will not impose a penalty if you voluntarily report and pay the tax with interest.

*Nominee – foreign nationals nominated under the Ontario Immigrant Nominee Program at the time of purchase, certified that they would apply to become a Canadian citizen or permanent resident.

*Protected Person – foreign national who falls under the protection of the Immigration and Refugee Protection Act

The David Bradica team is here to help every step of the way. Let us know how we can help you along this journey.

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