Ontario raises tax on foreign home buyers from 15 to 20%

It’s a provincially recognized truth that owning your own home in Ontario seems like a distant dream to many. The GTA, in particular, continues to break records with rising house prices and low inventory.

According to a recent report from the Building Industry and Land Development Association (BILD), the reference price for new single-family homes in the GTA was $1,858,713, up 35.3% over the past 12 months. For new apartments, the benchmark price rose 13% to $1,177,739.

A Scotiabank housing report also found Ontario has one of the lowest numbers when it comes to housing supply per capita.

“Young families, seniors and workers are desperate for housing that meets their needs,” said Treasury Secretary Peter Bethlenfalvy. “But a lack of supply and rising costs have made the dream of owning their own home out of reach for too many families in the county.”

As a result, the government has announced it is taking steps to make housing more accessible to residents priced out of the red-hot real estate market. That includes raising the speculation tax to 20 percent in an effort to curb real estate speculation.

Here’s how:

Raising the speculation tax rate for non-residents

Currently, the tax rate for homes purchased by foreigners, corporations and taxable trustees is 15 percent.

But as of today, that percentage will go up to 20 percent.

Bethlenfalvy said the government is “working to increase supply and keep costs down for families and homebuyers in Ontario, not foreign speculators looking to make a quick profit.”

Apply the tax across the province

Initially, the 15 percent tax only applied to foreign-owned homes in the Greater Golden Horseshoe Region.

Now, the 20 percent tax will apply to foreign-owned homes across the province. The province also says it is closing loopholes in the law to tackle tax avoidance.

New permanent residents can request discounts

In an effort to support newcomers, discounts and related exemptions will be available to new permanent residents. Foreign nationals who study and work in the province can also apply for the discount.

Set up a vacant home tax

The Vacancy Home Tax has already been introduced in Toronto. Now Ottawa and other municipalities will follow suit with plans to introduce similar taxes to help increase housing supply.

Strengthening consumer protection

To protect new home buyers, the government will double fines and extend the suspension of construction permits “to address unethical developer behavior”. Developers will also be penalized for canceled projects that affect home buyers.

Prime Minister Doug Ford said building new homes is an important way to keep costs down as Ontario’s population and economy continue to grow.

“Ontario is the best place to live, start a business and raise a family, but we can only build on our success if all hardworking Ontarios and their families can find the home they need and want,” he said.

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