15% Foreign Homebuyers’ Tax on its Way for Toronto and Victoria
With the housing markets in some of Canada’s largest cities, in this case, Toronto and Victoria, constantly on the rise, the government has a plan to implement certain measures to make purchasing a home more affordable for its citizens and to discourage speculation.
Last Thursday (April 20, 2017) the Ontario Liberal government announced their plan to “cool” the currently rather “hot” Toronto housing market. With 16 new measures, the Ontario Fair Housing Plan aims to help those who wish to make the province their home, find more affordable homes for themselves and their families. Premier Kathleen Wynne discussed the issues faced by the younger generations looking to rent or purchase their first homes, stating that “When young people can’t afford their own apartment or can’t even imagine owning their own home, we know we have a problem.”
While the Ontario Fair Housing Plan includes 16 new measures, the two main issues that are receiving the most attention are a foreign buyer tax and the expansion of rent control.
The 15% Foreign Buyers Tax
Similar to the foreign homebuyers’ tax that the government employed in Vancouver last August, this new proposed measure will target foreign buyers in the Greater Golden Horseshoe (the area of Ontario between the Niagara Region and Peterborough). Premier Kathleen Wynne was adamant that this tax is meant only for those not looking to make Ontario their home but who are only interested in turning a profit. The tax will only be imposed on non-Canadian corporations and individuals who are not citizens or permanent residents.
The tax will be effective on April 21st, should the legislation pass. Starting April 24th, anyone looking to purchase a house in the Greater Golden Horseshoe area will be required to prove citizenship and residency and provide information about how they plan to use the property.
As Premier Kathleen Wynne explained, the tax is not meant to prevent individuals from moving to Ontario. Therefore there are a few exemptions. Anyone who is charged the 15% tax and then obtains their citizenship or permanent resident status, within four years, foreign nationals working and living in the province and full-time international students will be eligible for a rebate.
Ontario’s Fair Housing Plan also includes measures that address the issue of affordable rental housing. The government plans to expand the already existing rent control regulations to include units that were built after November 1991 (rent control in the city currently only affects units built prior to November 1991).
The government also plans to invest in the development of more rental properties to hopes of increasing the affordable housing supply.
As of Monday, April 24, 2017, the city council of Victoria B.C. has tentatively agreed to a 15% tax for foreign homebuyers. Meant to target real-estate speculators, similar regulations were put into place in Vancouver last year and in Toronto just last week, not foreign buyers looking to make Victoria their home. The city council will have to have to go through a second vote before the final decision is made, but should they vote in favour of the tax, the plan is to ask the province to implement the tax right away. The city council will also ask the provincial government for the right to tax vacant homes in Victoria.
The city council is not unanimous in its opinions of the tax; some are in favour of the idea and see the effect it had on Vancouver as positive. While some are uncertain about the long-term effects it will have on the economy and real-estate market.