Despite previously discounting the idea, Toronto has now introduced a foreign property investor tax in a bid to cool the soaring property market.
Vancouver introduced a 15 per cent tax on property purchases by foreign nationals in 2016, but at the time Toronto insisted that they had no plans to follow suit and still encouraged foreign property investors.
However, last week it was announced by Ontario Premier Kathleen Wynne that a new 15 per cent tax would be imposed on purchases by foreign property investors, matching that of Vancouver.
The tax will be targeted at property buyers in what is known as the Greater Golden Horseshoe area from Niagara to Peterborough, if they are not Canadian citizens, permanent residents or Canadian corporations.
Property prices in the Greater Toronto Area rose by over 30 per cent in the past year, with the average price for a detached house now reaching $1.21 million Canadian.
This has prompted the introduction of the foreign property investor tax, with Wynne commenting: ‘There is a need for interventions right now in order to calm what’s going on.’
The premier insisted however that the tax was not targeting immigration, with a rebate possible for buyers who go on to acquire Canadian citizenship or permanent residency.
She said: ‘The non-resident speculation tax has nothing to do with new Canadians and people who want to make Ontario their home. With this tax, we are 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.’
Once introduced, the foreign property investor tax will apply retroactively to all property transactions from 21st April 2017.
Along with the new tax, Ontario is also expanding rent control, which currently applies only to units built before November 1991. Tenants in newer units had been complaining of dramatic rises in rent, and these newer properties will now also be included in rental controls. There are also plans for a charge on vacant homes.