Non-Resident Speculation Tax on Ontario Home Purchases

If you are buying a home in Ontario and you are not a Canadian citizen or permanent resident, you may owe an extra tax on top of the usual closing costs. It can add a very large amount to the cost of the purchase, so it is worth understanding before you sign.

This article explains who the Non-Resident Speculation Tax (NRST) applies to, the rate, the exemptions and the rebate for buyers who later become permanent residents. Individual facts can change the result, so confirm your situation with a lawyer before you commit.

Who pays and how much

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. 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 that definition.

Land transfer tax is payable when the transfer is registered on closing. 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 system. Ask your lawyer how the NRST will be handled on your closing.

What counts as the value of the consideration

For land transfer tax, the value of the consideration includes the purchase price, any liabilities assumed, benefits conferred, soft costs and the cost of upgrades, but not HST paid on the purchase price. The NRST is charged on the value of the consideration, so it is worth asking your lawyer how the figure will be worked out for your purchase.

Because NRST is charged in addition to land transfer tax, it helps to see the land transfer tax side too. Ontario land transfer tax is calculated in brackets, and each rate applies only to the portion of the value that falls in its bracket. 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
• 2.0% over $400,000

In the Ministry of Finance's worked example, land transfer tax on a value of $400,000 totals $4,475. For land with one or two single family residences, the rate is 2.5% on the part of the value over $2,000,000.

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 and paperwork. Raise it with your lawyer early, well before closing, so the documents can be gathered.

The rebate if you become a permanent resident

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

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

The application must be received within 180 days of becoming a permanent resident. That deadline is short, so note the date as soon as your status changes.

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.

Rebates that no longer exist

The former NRST rebates for international students and for 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. Be cautious about older articles or advice that still mention them.

What to do next

• Confirm your immigration status and your co-buyer's status before making an offer.
• Ask whether a nominee, protected person or spouse-of-a-citizen exemption could apply.
• Budget for the NRST in addition to land transfer tax.
• If you expect to become a permanent resident, check the timing, occupancy and spouse rules for the rebate.
• Diarize the 180-day application deadline that follows the date you become a permanent resident.
• Have a lawyer review the agreement of purchase and sale before you sign.

Frequently asked questions