Foreign buyers who want to a purchase a home in Toronto could soon face an even steeper price tag if city council approves a new municipal tax that aims to curb real estate speculation.
If approved, the Municipal Non-Resident Speculation Tax (MNRST), which is on the agenda at next week’s executive committee meeting, would force foreign buyers to pay an additional 10 per cent on the purchase price of a residential property starting in January 2025.
“The primarily objective of the MNRST is to safeguard and enhance the availability of residential housing supply and to maintain a level of affordability in the residential real estate market by discouraging international buyers from purchasing property in the City of Toronto, particularly those buyers who do not intend to live in the property, or where the purchase is for purely speculative motives,” a new staff report read.
The tax, according to the report, is expected to “deter real estate speculation” when coupled with other land transfer related impacts.
The report noted that the municipal tax will “mirror” the province’s Non-Resident Speculation Tax (NRST), which was implemented in 2017 and charges foreign buyers a tax of 25 per cent of the purchase price of certain properties throughout Ontario.
The same exemptions and refunds outlined in the provincial tax will apply to the municipal tax, including a rebate for foreign nationals who become permanent residents of Canada within four years of the purchase date.
The MNRST will not include multi-residential apartment buildings with more than six units, agricultural land, commercial land, or industrial land.
Exemptions will be considered for foreign nations who are nominated under the Ontario Immigrant Nominee Program, as well as protected persons, including refugees. Properties jointly purchased by a foreign national and a spouse who is a Canadian citizen, permanent resident, nominee, or protected person will also be excluded from the tax.
The province previously offered specific rebates for international students and foreign nationals working in Ontario but those were phased out in 2022 and therefore will not be included in the municipal policy.
While the goal of the tool is to reduce real estate speculation and not “maximize revenue generation,” it is estimated that it could contribute as much as $15 million to the city’s coffers in the first year of implementation.
Since the provincial non-resident speculation tax was introduced in 2017, Ontario has collected a total of more than $1 billion, with about half of this revenue attributable to home purchases in the City of Toronto.
The staff report recommends implementing the tax on Jan. 1, 2025 after a two-year federal ban on the purchase of homes by foreign buyers has lifted.
City staff note that since the federal ban was put in place, provincial NRST revenue collected in 2023 for Toronto properties was down by more than 65 per cent compared to 2022.
Members of the city’s executive committee will discuss the report at the next meeting on Jan. 30.
Source: toronto.ctvnews