Tax matters make our heads spin.
But our Newbigging-Pearson Real Estate Team does its best to interpret changes to tax law for our clients – so you will know what to expect when signing on that dotted line.
The spring 2017 budget in Ontario proposed some new tax items, and amendments to existing tax acts, affecting some homebuyers in the province, including those looking in the Niagara real estate market.
If you live in Ontario’s Greater Golden Horseshoe area – the area stretching from Niagara, up to Orillia, and from the Kawartha Lakes region into Peterborough and Northumberland County – there’s a new tax being applied to purchases of homes, one that is designed to keep property speculators from buying up homes and driving up real estate prices.
The good news is that this tax won’t affect everyone.
Proposed by the Ontario government in March, 2017, to deal with the high cost of homes in the GGH, the new tax is called the “Non-resident speculation tax,” different from Ontario’s already existing Land-transfer tax.
Land-transfer tax applies on the purchase of every home that is changing hands, when ownership is transferred. Some amendments were proposed to the Land Transfer Tax Act during Ontario’s spring 2017 budget. To check these and other tax amendments out, visit the budget website, HERE.
The NRST, on the other hand, will only apply if the home is being purchased by a foreign national.
The theory of this tax is that, by driving foreign nationals out of the real estate market in the GGH, home prices in this area may fall slightly, increasing the chances of home ownership for Ontario families.
According to Ontario Premier Kathleen Wynne, quoted in an article published by The Canadian Press April 20, 2017 (‘Ontario to tax non-resident foreign housing buyers 15 %, expand rent control,’ by Jessica Smith Cross and Allison Jones, viewed on the website cnews.canoe.com), the province’s Liberal government isn’t interested in controlling the real estate market, especially in the GTA.
Wynne calls the NRST more of a speculation tax. It will affect foreign buyers who are not citizens, permanent residents or Canadian corporations.
“With this tax, we are targeting people who aren’t looking for a place to raise a family; they’re looking only for a quick profit or a safe place to park their money,” Wynne is reported saying.
She added that immigrants would not be targeted and a rebate would be available to foreigners who work in Ontario; to those who subsequently attain citizen or permanent resident status, and to international students.
That’s good news, especially in Niagara, where Niagara College and Brock University attract hundreds of international students every year, and yes, sometimes their families purchase homes here.
It’s important to note that as of May 12, this legislation had not yet been approved by the Ontario legislature. Once it is approved, however, the application of the tax law will be retroactive to April 21.
In a bulletin released May 5 on its Ministry of Finance website, the ministry recommends all transfers registered on or after April 21, 2017, include one of the three statements regarding the NRST as set out in its payment guidelines, HERE. The MOF is suggesting you pay the NRST if necessary. If the purchase of the home falls through, they say the tax amount will be refunded, without interest.
All well and good. But if the NRST affects only a small percentage of homebuyers, will it really alter the market enough that home prices will drop?
According to an article posted to the Toronto Life website May 11, which brought a real estate expert and a housing expert together to discuss the NRST (this is a good article, well worth the read), the new tax isn’t too well thought-out by government, and it remains to be seen if the tax will improve prices in Ontario markets, or not.
While home prices in Niagara are on the rise, given our nearness to the GTA and the fact commuting is possible, Niagara families can still take heart that home ownership here isn’t just something they dream about.
Niagara real estate bargains are still out there – beautiful, smaller homes, perfect for families or singles ready to purchase their first property. And the best part of that?
It’s Niagara – a place we know you’d love to call home, too.
If you are ready to talk about home ownership, give our office a call at 289-686-1552, or send us a message via our website HERE, on our contact page.
Hope to hear from you soon!