Important Reminder: Update to Non-Resident Speculation Tax

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Effective October 25, 2022, the Non-Resident Speculation Tax (NRST) rate was increased to 25 per cent from 20 per cent. It applies to the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are not Canadian citizens or permanent residents of Canada, or by foreign corporations or taxable trustees.

The NRST applies to the value of the consideration for the transfer of residential property if any one of the transferees is a foreign entity or taxable trustee. For example, if a transfer of residential property is made to four transferees and one of them is a foreign entity (acquiring a 25 per cent share in the land), the NRST would apply to 100 per cent of the value of the consideration for the transfer.

The NRST rate depends on when the agreement of purchase and sale was entered into or assigned. For more information, see https://www.ontario.ca/document/land-transfer-tax/non-resident-speculation-tax. This updates our previous article on the NRST.

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An annual tax will be levied on vacant residences in Toronto and Ottawa, payable beginning in 2023. Real estate lawyers should be aware of the details in order to properly advise clients who may own vacant properties in these cities.