According to the Ontario Minister of Finance, the lack of housing supply and rising costs “have made the dream of home ownership unrealizable for far too many families” in Ontario. (Photo: The Canadian Press)
Ontario is increasing the speculation tax on non-resident home buyers to 20% and extending it to the entire province.
The government announced that the changes will come into force on Wednesday and are part of the government’s housing action plan.
“Our government is working to increase supply and keep costs low for Ontario families and first-time homebuyers, rather than foreign speculators who want to make a quick buck,” the government said Tuesday. Finance Minister Peter Bethlenfalvy in a statement.
According to him, the lack of housing supply and rising costs “have made the dream of home ownership unrealizable for far too many families” in Ontario. The speculation tax for non-residents (ISNR) is “the most comprehensive” in Canada, argued the minister.
The ISNR was first introduced in 2017. It was set at 15% and only applied to homes purchased by foreign nationals, foreign corporations and taxable trustees in the densely populated Golden Horseshoe region, in southern Ontario.
The opposition New Democrats and Greens had previously called for the speculation tax for non-residents to be extended province-wide to 20%.
The Ontario government also announced on Tuesday that it would close “loopholes” in refunds offered to some residents affected by the tax. Foreign students enrolled in full-time studies for at least two years after purchase and foreign nationals who have worked full-time in Ontario for one year after purchase will no longer be eligible for refunds.
Discounts and other exemptions for new permanent residents of Canada will still be available, the government said.
“Foreigners studying and working in Ontario who wish to become permanent residents of Canada will be able to apply for a rebate,” the statement read.
The province wants the aid to be offered “only to newcomers who are committed to settling in the province and staying there for the long term”.
Ontario says it is considering other measures to address land speculation issues, such as slowdowns in the construction sector, which could “artificially inflate” new home prices.
Collaboration with municipalities
The province says it is working with municipalities that are considering establishing a vacancy tax. The City of Toronto has already introduced such a tax and other municipalities are in the process of doing so.
The province said it intends to set up a working group with municipal officials to share best practices on the idea.
She mentioned wanting to set up a working group with representatives of municipalities to share best practices.
A recent report by a task force that studied housing affordability in Ontario found that home prices in the province have tripled over the past decade, outpacing income growth.
At the same time, the report found that Ontario needed to build 1.5 million homes over the next 10 years to address the supply shortage.