Non-Resident Speculation Tax When Closing in Ontario

If you are a newcomer or a foreign national buying a home in Ontario, one of the first questions is whether an extra tax applies on top of land transfer tax. For many buyers it does, and it can change the cost of the purchase significantly.

This article explains who the Non-Resident Speculation Tax (NRST) applies to, how it fits with closing, and when a rebate may be available. Your immigration status and the way you hold title both matter, so confirm the details with a lawyer before you commit.

Who the tax applies to

NRST is 25% of the value of the consideration, effective October 25, 2022. It applies to residential property anywhere in Ontario bought by foreign nationals, foreign corporations and taxable trustees, and it is charged in addition to Ontario land transfer tax.

For NRST, a foreign national is an individual who is not a Canadian citizen or permanent resident of Canada. First Nations individuals registered under the federal Indian Act are excluded from the definition.

Possible exemptions

An NRST exemption may be available for registered transfers where the transferee is a nominee, a protected person, or the spouse of a Canadian citizen. Supporting documents may be required.

Whether you fit one of these categories depends on your facts, so gather your immigration and marriage documents early and raise them with your lawyer before closing.

How it fits with closing

Land transfer tax is payable on every conveyance of land tendered for registration, so it is paid when the transfer is registered on closing, or before then. Electronic registration is mandatory in Ontario except for complex registrations, and land transfer tax statements are completed as part of the electronic transfer.

Only authorized Teraview account holders and their registered users, such as lawyers and conveyancers, can create and submit documents in the electronic land registration system. NRST is charged in addition to land transfer tax, so plan for both costs when you prepare for closing. How your status affects what you owe depends on your situation, so confirm it with your lawyer. Ask your lawyer how and when the funds must be in place.

Rebates for buyers who become permanent residents

A foreign national who paid NRST can get a rebate if all of these apply:

• They become a permanent resident within four years of the purchase.
• They hold the property alone or only with their spouse.
• They occupy it as their principal residence starting within 60 days after registration.

The application must be received within 180 days of becoming a permanent resident.

There is a special rule for co-buyers. For this rebate, the buyer and any co-buyer must be spouses of each other on the day of closing. Becoming spouses after closing does not count. If both transferees are spouses, only one of them needs to become a permanent resident.

The former rebates for international students and foreign nationals working in Ontario are no longer available. They applied only to agreements entered into on or before March 29, 2022, and the application deadline of March 31, 2025 has passed.

Land transfer tax and the first-time buyer refund

Regular land transfer tax still applies. For agreements entered into after November 14, 2016 that are registered on or after January 1, 2017, the rates are 0.5% up to and including $55,000; 1.0% over $55,000 up to $250,000; 1.5% over $250,000 up to $400,000; and 2.0% over $400,000, each applying only to the portion in its bracket. For land with one or two single family residences, the rate on the part over $2,000,000 is 2.5%.

The first-time homebuyer refund is up to $4,000. For agreements signed after November 14, 2016, a buyer must be a citizen or permanent resident, but a buyer who is not one at closing has 18 months after registration to become eligible and apply.

What to do next

• Confirm your immigration status and how title will be held before you make an offer.
• Ask your lawyer whether NRST applies and whether an exemption may fit.
• Collect documents that support any exemption, such as proof of marriage or status.
• Diarize the four-year, 60-day and 180-day dates if you may seek the rebate.
• Budget for NRST and land transfer tax together.

Frequently asked questions