written on behalf of Feigenbaum Law
Ontario recently announced its Fair Housing Plan, which includes a “Non-Resident Speculation Tax” that will impact all US buyers of residential property in Ontario.
With an eye to keeping housing prices from climbing out of reach for most buyers, the Ontario government has implemented a 15% Non-Resident Speculation Tax.
What purchases are subject to the Non-Resident Speculation Tax?
The tax applies to any purchase or acquisition of residential property containing up to six single family residences. The definition of “single family residence” includes condominiums, so a transfer of more than six condominium units would still be subject to the tax.
The new tax applies to all properties located in the “Greater Golden Horseshoe” region of the province, which extends north to Simcoe County, and stretches from Brant and Waterloo Counties in the west to Peterborough and Northumberland in the East.
This tax applies to the entirety of the sale price, regardless of the interest held by the non-resident. If a US buyer makes a joint purchase with a Canadian buyer, they must still pay 15% on the full value of the transfer. All purchasers are liable for the tax on a joint and several basis.
Are all US buyers subject to the Non-Resident Speculation Tax?
Any non-citizen, non-permanent resident, non-Canadian corporation or “taxable trustee” is subject to the tax. A taxable trustee is a foreign entity holding title in trust, or a Canadian entity that holds title in trust for foreign beneficiaries. Transferees of land containing residential property will now have to provide additional details to the Ministry of Finance which will identify foreign entities and US buyers gaining an interest in these properties.
All purchases after April 21, 2017 are subject the tax, meaning that binding agreements signed up to April 20 will be exempt.
There are some possible exemptions for refugees and foreigners who receive property through a Canadian spouse. Rebates may also be made available to US buyers who pay the tax and subsequently become Canadian citizens or permanent residents, or are otherwise legally resident in Ontario as a full-time employee or student for a period of time.
Toronto-based tax advice for US buyers of Canadian residential property
At Feigenbaum Tax Law, our cross-border lawyers and accountants provide tailored services to US and Canadian clients with cross-border assets and business operations. If you are an American living in Canada that may purchase a residential property, we can review your potential tax liabilities, and explore any possible exemptions that may be available.
To discuss how the new Non-Resident Speculation Tax could apply to you, contact us online, or toll free at (877) 275-4792.