Chetan Realestate

If you’re living in Ontario on a work permit and thinking about buying a home, you might have heard about the Non-Resident Speculation Tax (NRST). This tax might seem like a big extra cost, but there are situations where you might not have to pay it at all, especially if you’re married to someone who is a permanent resident or if you’re planning to become one yourself. Let’s break down what this tax is all about and how you can potentially save some money.

What is the Non-Resident Speculation Tax?

The NRST is a tax that Ontario charges to people who aren’t Canadian citizens or permanent residents when they buy a house in the province. This tax is 25% of the home’s purchase price and is added on top of what you normally pay for the house.

Who Pays the NRST?

This tax specifically targets:

• People who are not Canadian citizens or permanent residents.
• Companies that are registered outside Canada or controlled by someone who isn’t a Canadian citizen or permanent resident.
• Certain types of trusts (a form of property ownership managed by one person or organization for the benefit of another).

However, there are special rules that can reduce or eliminate this tax if you meet certain conditions.

How Can You Get an Exemption or a Rebate?

There are ways to avoid paying this tax or to get the money back if you initially had to pay it:

Example: Married to a Permanent Resident

Let’s use John and Emily as an example. John is a software developer from another country, working in Ontario with a work permit, and Emily is a permanent resident in Canada. They want to buy a house together in Toronto. Normally, John would have to pay the NRST because he is not a permanent resident. But, since Emily is a permanent resident and they will both live in the house, they can apply to get this tax money back after they buy the house.

For detailed regulations on how the NRST is applied and specific exemptions, visit Ontario’s NRST exemptions guidelines.

Special Exemptions Under the Prohibition on the Purchase of Residential Property by Non-Canadians Act

According to the Canadian Mortgage and Housing Corporation (CMHC), there are additional exemptions under the Prohibition on the Purchase of Residential Property by Non-Canadians Act. These exemptions are particularly relevant for work-permit holders and include:

• Temporary residents working in Canada who hold a valid work permit or are authorized to work here can buy homes if they have not previously purchased a property under the prohibition and the remaining validity of their work permit is sufficient (at least 183 days).
• Refugees and protected persons are also exempt, offering a path to homeownership for those who have fled to Canada for safety.

Explore these exemptions in more detail at the CMHC’s page on the Prohibition Act.

How to Apply for a Rebate

If you’re eligible for a rebate, like John and Emily, you have to fill out an application form and submit it within four years after buying the house, but no later than 180 days after either you or your spouse becomes a permanent resident.

For a step-by-step guide on applying for NRST rebates and refunds, check here.

You will need:

• Proof that you or your spouse is a permanent resident.
• Evidence that the house is your main home.
• A copy of the property’s deed.
• Your IDs and other required documents.

Rebates for Work-Permit Holders

If you are working in Ontario on a valid work permit, you might also get a tax rebate. You need to have been working full-time continuously for at least one year.

Full-Time Work Rebate Example

Imagine Maria, who also moved to Ontario with a work permit. She has been working full-time for 18 months and buys a house. She pays the NRST at first because she isn’t a permanent resident yet. Here’s how she can benefit:

• After working full-time for a year and living in the house as her main home, Maria can apply for a rebate to get the NRST money back.
• She must apply within four years of paying the NRST and ensure all her paperwork is in order.

Tips for Buying Property on a Work Permit

• Check Your Eligibility: Before you buy a house, see if you might qualify to get the NRST back. Knowing this ahead can save you a lot of money.
• Keep Good Records: Save all documents related to your job and where you live. These will be important when you apply for a rebate.
• Get Professional Advice: Property laws can be tricky. Talking to a real estate lawyer or tax professional can help you understand everything and avoid surprises.
• Stay Updated: Laws and rules can change. Keeping up with any updates about the NRST or rebates can help you plan better.

Conclusion

Buying a home in Ontario doesn’t automatically mean you have to pay a lot extra in taxes if you’re on a work permit. If you know the rules and prepare well, you might save significantly on the NRST, making your dream of owning a home more achievable. Always ensure you have the latest information and get professional advice to guide you through the home-buying process.