Mayor Olivia Chow’s executive committee easily approved a proposal to impose a tax on foreign home buyers in Toronto. The committee gave this approval on January 30.
As a result, foreign buyers will have to pay a new tax of 10 percent on the purchase price. It will take effect on January 1, 2025, subject to City Council approval.
In a summary of the proposed tax, city staff said staff recommended a 10 percent tax on the purchase price of residential buildings. Other taxes related to land transfer will also be applicable. This is expected to stop speculation in the housing market.
The move comes at a time when all levels of government are scrambling to save homes for existing residents. Toronto City Council earlier voted to increase the vacant home tax to prevent owners from leaving their homes empty.
Ontario imposed a 25 per cent non-resident speculation tax (NRST) on residential buildings in 2017. The new municipal non-resident speculation tax also mirrors the provincial move, city officials said. They say the negotiations with provincial officials over the last few months on a new contract are part of coordination with the province on the new tax.
The federal government’s ban on non-Canadians buying residential homes expires this year. The new tax will take effect immediately after the council approves it.
According to city staff estimates, the tax would bring in $1.5 million in revenue for the cash-strapped city in its first year. If the federal government continues to enforce the ban beyond this year, the revenue will be close to $9.6 million.
But mortgage broker Alan Weintraub of mortgageoutlet.com doesn’t think the tax will improve market conditions much. He said, I think foreign buyers are a very small part of the housing market. I don’t think it will affect the market at all. Rather, the reduction in development charges will play a major role in increasing the supply of houses.