Foreign Buyer Tax Coming To Ontario
By Pace Law | April 20, 2017
A foreign buyer’s tax similar to that introduced in Vancouver last year will be coming to Ontario soon, as the government hopes to cool a red hot housing market. New rent control rules will also be put into effect. The Toronto Star reports:
Premier Kathleen Wynne is taking wide-ranging action to protect tenants from massive rent increases and homebuyers from being gouged.
As first disclosed by the Star, Wynne is imposing a 15 per cent foreign buyers’ levy — the non-resident speculation tax — to slow down southern Ontario’s skyrocketing real estate market that the Bank of Canada has warned is unsustainable.
The tax “would apply to transfers of land that contain at least one and not more than six single family residences” and affect buyers who are not citizens or permanent residents as well as foreign corporations.
It will hit all residential transactions in the Greater Golden Horseshoe — including the Greater Toronto Area, Niagara, Kitchener-Waterloo, Barrie, Orillia, and Peterborough.
“This plan balances those needs to stabilize the market and prevent a sharp correction that would be harmful to everyone,” Wynne told reporters at the Williams Landing pub in Liberty Village on Thursday against a backdrop of gleaming condo towers.
As well, rent controls limiting increases on all buildings to the rate of inflation — as long as it is 2.5 per cent or lower — will be introduced. Currently only units built before 1991 are subject to such curbs.
Investors should note that the government is taking aim at those who purchase condos before they are built in the hopes of making a profit later. The CBC:
The government will ban speculators from “assignment flipping” in the pre-construction housing market, the sources say. The move is targeted at investors who put deposits on multiple units at pre-construction prices — typically in condominiums, but sometimes in new subdivisions — then sell the title for profit before the building is complete, a process known as assignment.
Sousa has previously signaled his intent to target such investors, labelling them “property scalpers” who are driving up prices.