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Toronto to impose 15% tax on foreign home buyers

Apr 23, 2017 | 0 Comment(s)

Toronto will become the second city in Canada to impose an additional 15% tax on foreign home buyers. The Ontario provincial government has proposed a legislation that levies tax on foreigners buying properties in the Golden Horseshoe, an area that stretches from the Niagara region and the Greater Toronto Area to Peterborough.

Earlier in August, 2016, a new tax on foreign buyers in Vancouver had a huge impact on the city’s property market. Home sales reported a steep decline.

The Golden Horseshoe area, the tax will apply to all residential purchases made by those who are not citizens or permanent residents of Canada, as well as foreign corporations. Once the legislation passes, the tax would be applied retroactively to purchases made as of April 21.

“When young people can’t afford their own apartment or can’t imagine ever owning their own home, we know we have a problem,” Kathleen Wynne, the Ontario premier was quoted as saying.

“And when the rising cost of housing is making more and more people insecure about their future, and about their quality of life in Ontario, we know we have to act,” he said.

With foreigners being largely blamed for rising home prices, the government was under pressure to intervene. The average price of homes in the Greater Toronto Area soared 33% in the past year, pushing the cost of a detached home to an average of C$1.21m (approximately US$900,000).

“There is a need for interventions right now in order to calm what’s going on,” said Wynne.

The tax would be revenue neutral, she added, aimed squarely at tempering demand. “In some ways, we have to realize this is a good problem to have … [It] is the unwanted consequences of a strong economy with a promising future.”

The tax was not aimed at new Canadians or those looking to settle in Toronto, she stressed. “With this tax, we’re targeting people who aren’t looking for a place to raise a family, they’re looking only for a quick profit or a safe place to park their money.”

Those who pay the tax but later become Canadian citizens or permanent residents, or who work or study in the area, will be eligible for a rebate.


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