New 15% foreign buyer tax set to come to Toronto

Andrew Cummings
April 24, 2017

Foreigners who buy homes in Toronto and its surrounding area now face an additional 15% tax - echoing a recent measure adopted in Vancouver - as part of a slew of measures aimed at tempering a heated housing market that ranks as one of Canada's most expensive.

After two consecutive years of double-digit gains, average house prices in the Toronto region reached $916,567 in March 2017, up 33.2 per cent from a year earlier.

A spokeswoman for Premier Kathleen Wynne said Tuesday a tax on non-resident speculators is one of the measures being considered.

The tax would not target immigrants and a rebate would be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and worldwide students.

With new legislation, the Wynne government also plans to limit rent increases to 2.5 per cent per year for all units in the province.

The province is introducing a five-year $125 million program to encourage construction of purpose-built rentals, units built especially for renting and not owning.

Strengthen the Residential Tenancies Act, including a standard lease with multilingual information, tightening provisions for "landlord's own use" evictions, and ensuring adequate tenant compensation if evicted.

A ban on flipping of pre-construction units by speculators. Toronto would also be allowed to impose a tax on vacant homes and us surplus lands for affordable housing.

But if prices in Vancouver keep climbing, it might mean that the impact of British Columbia's foreign buyer tax is wearing off and that Toronto's own housing taxes might deliver only a temporary reprieve.

- Align property tax for new multi-residential apartment buildings with other residential properties.

The new plan will expand rent control to include all Ontario buildings constructed after 1991.

"There is now reason to believe that the market correction underway in Vancouver may be short-lived", he said.

Federal Finance Minister Bill Morneau, Ontario Finance Minister Charles Sousa and Toronto Mayor John Tory met on April 18 to discuss the thorny question of how to cool the city's residential real estate market, though they stopped short of providing details on specific measures. Economists and real-estate officials say the Vancouver foreign-buyers tax prompted bubblelike conditions to migrate east to Toronto.

Sales in Greater Vancouver, once the country's hottest real estate market, fell 31.5 per cent compared with a year ago.

Wynne says the plan will make buying or renting a home a fairer and more affordable process for residents in Ontario.

Simply increasing taxes on home ownership could lower the value of Toronto real estate, while doing nothing to increase the supply of homes, bringing with it the worst of both worlds. At the same time, we recognize the need to protect the significant investment homeowners have made. While this is good news, our government has become increasingly concerned about rapidly rising rents and housing prices, and their impact on the many people looking to find a home.

- A partnership with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.

The plan also includes establishing timelines for elevator fix so that they aren't broken so often in condos and apartments.

"This report is a look inside the heads and homes of Canadians, and should be a companion piece for those seeking a more in-depth understanding of our housing market and how it affects Canadians".

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