With a 15% foreign buyer’s tax looming over foreign buyers purchasing in the GTA, it’s important to know what constitutes a foreign buyer.

 

The 15% NRST (Non-Resident Speculation Tax) is a tax solely aimed at foreign buyers who are buying up Canadian property and banking on the property appreciating. If you’re a Canadian citizen or a permanent resident, your purchase is not subject to the NRST tax. However, if you’re a foreign student, refugee, or the spouse of a Canadian/refugee/or protected person, you might be excused from the tax.

 

exceptions for foreign buyers

The following exceptions to the tax are only valid if the buyers become the primary residents of the home. You do not have to pay the tax if:

  • You’re a nominee to become a permanent resident.
  • You’re a protected person under the Immigration And Refugee Act.
  • You’re the spouse of a Canadian citizen, a nominee, or a refugee.

NRST rebates for foreign buyers

If you are a foreign buyer who is charged the NRST tax, you are eligible to claim a refund of the tax within 4 years of the tax being payable if you meet the following criteria:

  • If you were a foreign buyer who became a permanent resident within 4 years of buying a property.
  • If you are an international student, at an accredited facility, who is enrolled full-time for more than 2 years after buying a property.
  • If you are a foreign national that is working legally in Ontario for more than one year after the purchase of the property.

To qualify for the refund, you must move into the home within 60 days after acquiring it. You also have to live in it as your primary residence. Time is of the essence, if you’re a foreign buyer who becomes a permanent resident, you must apply for the NRST tax within 90 days after becoming a permanent resident. No application can be made for a refund after 4-years-and-90-days, or more, passes from the date the tax becomes payable.

frequently asked questions about the Foreign Buyer's Tax

I am a Canadian citizen living overseas, but I want to buy property back home. Will I be charged the NRST tax?  The short answer is: No, you won’t be charged NRST tax. The tax is only for Non-Canadian buyers.

Are there any other fees and taxes for foreign buyers? Yes, foreign buyers have to pay the same land transfer tax, lawyers fees and other moving costs as any other buyer.

My spouse is not a Canadian citizen, but I am, will they be charged the tax? Depends if they are considered a spouse under Canadian law. They have to either be your legally wed partner, or you must have lived together for 3 years or more, or have children together. In the instance that they are not considered your spouse under Canadian law, they have to pay NRST tax on the full purchase price.

Are preconstruction Condo sellers / assignors subject to the NRST?

The NRST does not apply if the assignor does not acquire a beneficial interest in the land.

While we strive to have the most up-to-date and correct information, we cannot guarantee it. For more up-to-date information on the NRST Tax act, visit the government’s NRST tax bulletin.  If you’re going to buy a home and you’re not sure whether you’re considered a foreign buyer, contact a real estate lawyer.

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