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Dave Law Professional Corporation
Dave Law Professional Corporation
Dave Law Professional Corporation
The information on this page and its related pages is provided as a general guideline only, and for more information, please visit https://www.ontario.ca/document/non-resident-speculation-tax and the Land Transfer Tax Act and its regulations.
This page will provide helpful information for foreign investors purchasing and selling residential real estate in Ontario. The Non-Resident Speculation Tax (NRST) applies on the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are foreign nationals (as defined in the Immigration and Refugee Protection Act (Canada), an individual who is not Canadian citizens or permanent residents of Canada) or by foreign corporations or taxable trustees.
The NRST applies to foreign entities or taxable trustees who purchase or acquire residential property in Ontario. The persons purchasing or acquiring land are referred to as transferees.
A foreign entity is either a foreign national or a foreign corporation.
A foreign corporation is a corporation that is one of the following:
A taxable trustee means either a trustee of:
Ontario real estate law allows non-residents of Canada to buy and sell property. However, there are certain considerations that a foreign investor should be made aware of.
The NRST is applied to the value of the consideration for a conveyance. See the Land Transfer Tax page for information about the value of the consideration. For information on calculating the value of the consideration on the purchase of a newly constructed home, please see Determining the Value of the Consideration for Transfers of New Homes.
The NRST applies in addition to the general Land Transfer Tax (LTT) in Ontario. It does not apply on top of the LTT.
Legal fees and disbursements may vary depending on the circumstances of your transaction. Please contact our office for a quote.
Any foreign investor, not a Canadian Citizen and/or Permanent Resident of Canada, purchasing a residential home must pay an additional tax known as the Non-Resident Speculation Tax(NRST). This amount will be based on the purchase price of the home. This tax applies to ALL of Ontario properties. Please note: If one becomes a Canadian citizen and/or Permanent Resident within four years of closing the purchase transaction, you can apply to the Canada Customs Revenue Agency for a refund of the NRST tax paid if one satisfies certain requirements.
Getting a mortgage: It is important to have your agreement conditional on financing to ensure you qualify here in Canada for a mortgage. If a purchaser does not work in Canada and does not have established Canadian income, most mortgage lenders require a higher cash down payment (on average 35% of purchase price). All lenders need to confirm the identity of their clients. You should ensure whether your chosen financial institution will accept foreign identification.
Power of Attorney: Most lenders rarely accept Power of Attorney. It is very important that when you begin the process of obtaining any type of financing, you notify your lender of your intention to use a Power of Attorney and their permission to do so. If your request is denied, we will need to make the necessary arrangements to have the documentation sent to you, and they will need to be witnessed and notarized by a solicitor in your jurisdiction. In these cases, you should make the required arrangements as early as possible so that your lender and lawyers can coordinate to get the documents signed and approved before your closing date.
Fire Insurance: Financial institutions will not allow mortgage funds to be released unless the purchaser’s lawyer receives a binder for fire insurance (from an Ontario Insurance broker) prior to closing. If a non-resident owns no other Ontario property, such insurance will be more challenging to acquire. Before committing to buying a property in Ontario, It is highly recommended that you insert a conditional clause for obtaining home insurance to your agreement of purchase and sale; that way, you can get written confirmation by an Ontario insurance broker that fire insurance can and will be provided for any intended purchase.
Final Appointment & Closing Funds: We usually contact you three (3) to four (4) business days before the closing date to arrange an appointment to review your file and sign your final documents. This will be the only time we contact you unless any issues arise with your file and/or we require additional information. The final appointment will be held one (1) or two (2) days before your closing day. At this time, we will require that you bring a certified cheque or bank draft payable to “Dave Law Professional Corporation In Trust,” an amount which we will advise prior to the final appointment. The amount payable will cover the following: Land Transfer Tax and registrations of your deed and mortgage(s); balance due to close; our legal fees and disbursements; and financial institution’s wire transfer fee (if applicable). If you cannot be here for closing and have arranged for signatures either by way of Power of Attorney or by notarization in the jurisdiction you currently reside in. In that case, you must take the necessary steps to have the required monies wired to a local Canadian financial institution, whereas a designated bank representative can issue a certified cheque and/or bank draft payable to Dave Law Professional Corporation In trust.
Closing Day and Pick-up Keys: On the closing day, we will have possession of the keys on or before 5:00 p.m. The actual time depends on the following factors:
When a non-resident of Canada sells their home and is planning to leave or has already left the country, a Compliance Certificate from Canada Customs Revenue Agency (also known as Revenue Canada) is required to confirm that no monies is owed to the Canadian government before departure. The non-resident of Canada will need to apply directly to CCRA (Revenue Canada). This can be a lengthy process and takes approximately 4 to 6 weeks. If the Compliance Certificate is not readily available at the time of your sale, then your real estate lawyer is required to HOLDBACK 25% of the sale price (i.e., $400,000.00 x 25% = $100,000.00) until the Certificate is received. It is best to consult with a tax accountant regarding the application process. For your convenience, the link for the Compliance Certificate application is below: http://www.cra-arc.gc.ca/E/pbg/tf/t2062/README.html
Other helpful links:
https://www.ontario.ca/document/non-resident-speculation-tax#section-5
