Finally, we get an official number on foreign buying in Ontario. The Ontario Ministry of Finance released the first set of numbers for the Greater Toronto Area. While the numbers are significant, it’s much lower than previous estimates given by the local board. These numbers are also expected to be revised lower as rebates to the foreign buying tax are given out.
Foreign Buyers Accounted For 4.7% of Sales
The number of foreign buyers estimated in the Greater Golden Horseshoe (GGH) is significantly lower than the Toronto Real Estate Board (TREB) estimated last month. The Ministry of Finance counted 18,282 transactions between April 24 and May 26 in the GGH. The Ministry estimates 4.7% of those sales were by individuals that were not citizens or permanent residents of Canada. That’s up to 860 pieces of property bought by non-residents. TREB had previously estimated 7% in the regions they cover. While the number is significant, it’s still lower than the number of buyers that bought and sold a home in less than 12 months in Toronto.
Subject To The New Non-Resident Speculation Tax (NRST)
These purchases may be subject to the province’s Non-Resident Speculation Tax (NRST). The NRST is a “foreign buyer” tax that non-residents must pay if buying property in the GGH after April 20, 2017. The amount is 15% of the price paid, and is in addition to normal land transfer taxes. The GGH is a new term, and consists of the cities of Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York.
NRST Rebates To Be Given To Some
The province is saying “may be subject,” because there are quite a few people in that number that are entitled to rebates on NRST paid. Rebates are available for anyone working in the province, is considered a permanent resident, or an international student. Bluntly speaking, the province isn’t looking to crack down on anyone that wants to move here – just people that are looking to buy and hold property like gold bars. Once these numbers are factored in, the 4.7% will likely be much smaller.
While the number was relatively small, the impact of the tax is expected to have a large psychological effect on buyers. Shortly after BC rolled out a foreign buying tax, domestic buyers took a wait and see approach. Early numbers from TREB show that Ontario’s buyers may be adopting a similar wait and see attitude before deciding to jump back in (or not).
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