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What is the Foreign Buyers Tax (Non-Resident Speculation Tax)?

The Foreign buyers property tax, or Non-Resident Speculation Tax (NRST) is a term thrown around a lot in real estate. There’s often confusion about what it is and who it applies to, so here’s an overview of the tax.

What is it?

The Non-Resident Speculation Tax, referred to as “NRST” by most people, is a 15% tax added to the price of homes bought in the Greater Golden Horseshoe (GGH) by individuals who are not citizens or permanent residents of Canada (or purchased by non-Canadian corporations). 

Where Does it Apply?

Regions included in the Greater Golden Horseshoe are as follows: 

  • City of Barrie
  • County of Brant
  • City of Brantford
  • County of Dufferin
  • Regional Municipality of Durham
  • City of Guelph
  • Haldimand County
  • Regional Municipality of Halton
  • City of Hamilton
  • City of Kawartha Lakes
  • Regional Municipality of Niagara
  • County of Northumberland
  • City of Orillia
  • Regional Municipality of Peel
  • City of Peterborough
  • County of Peterborough
  • County of Simcoe
  • City of Toronto
  • Regional Municipality of Waterloo
  • County of Wellington, and
  • Regional Municipality of York

The NRST was introduced in 2017. As such, it doesn’t apply to any Agreement of Purchase and Sale entered into on or before April 20, 2017 (a day before the NRST came into effect). 

Definitions

The NRST is described as a tax applied to foreign nationals, which is another word for individuals who are not Canadian citizens or permanent residents. Foreign corporations are either corporations incorporated outside of Canada, or those incorporated inside of Canada but controlled by another Corporation outside of Canada or by a foreign national. 

Which Properties are Subject to the NRST?

The NRST applies to purchases of land with at least one and not more than six single family residences. Common examples include:

  • detached and semi-detached houses
  • townhouses
  • condominium units
  • duplexes, triplexes, fourplexes, fiveplexes and sixplexes.

Therefore, the NRST doesn’t apply to multi-residential buildings with more than six units, or to agricultural, commercial or industrial land.

How is it Calculated?

As previously mentioned, the NRST is calculated as 15% of the purchase price of the residential property. For example, if a single-family detached home sold for $500,000, the NRST would be $75,000. If a buyer is purchasing both a residential property (to which the NRST applies) as well as an excluded type of property, such agricultural land, the NRST only applies to the residential property.

Hopefully we’ve provided a clear and thorough overview of the Non-Resident Speculation Tax. If you still have questions, please feel free to contact our office for further information.

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