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LIVEHERE REAL ESTATE
What is Non-Resident Speculation Tax (NRST)? The NRST applies on the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are foreign nationals (individuals who are not Canadian citizens or permanent residents of Canada) or by foreign corporations or taxable trustees. Effective October 25, 2022, the NRST rate is 25%. Who pays NRST The NRST applies to the value of the consideration for the transfer of residential property if any one of the transferees is a foreign entity or taxable trustee. For example, if a transfer of residential property is made to three transferees, one of whom is a foreign entity that acquires a 33% share in the land, the NRST would apply to 100% of the value of the consideration for the transfer. As an example, Tomoko, Shoshana, and Lieven buy a home together. Tomoko acquires 33%, Shoshana acquires 33% and Lieven acquires 34% interest, with a value of the consideration of $1,500,000. Tomoko and Shoshana are Canadian citizens, but Lieven is a foreign national. The NRST is applied to the full value of the consideration, resulting in NRST payable of $375,000. They do not pay NRST on just 34% of the value of the consideration. The NRST is not prorated to the interest acquired by the foreign national. Each transferee is liable for any NRST payable. If a foreign entity or taxable trustee does not pay the NRST, the other transferees will be required to pay the tax. This applies even if the other transferees are Canadian citizens, permanent residents of Canada or non-foreign corporations. Exemptions from the NRST An exemption from NRST may be available for registered transfers if the transferee is a nominee, a protected person or a spouse of a Canadian citizen, a permanent resident of Canada, a nominee or a protected person. Exemptions in the Act and its regulations that apply to LTT also apply to the NRST. Supporting documentation may be required by the ministry to substantiate all claims for an NRST exemption. To learn more, refer to Ontario.ca's page on: Transfers that are exempt from the NRST. Rebate and refund of the NRST A rebate of the NRST, may be available for registered transfers if the transferee becomes a permanent resident of Canada. If the land purchased is within the Greater Golden Horseshoe Region of Ontario, and if a binding agreement of purchase and sale was signed on or before March 29, 2022, and not assigned to other persons after March 29, 2022, then a foreign national may qualify for the International Student NRST Rebate or the Foreign National Working in Ontario NRST Rebate. A refund of the NRST may be available for eligible transferees if the tax has been improperly paid or overpaid. Supporting documentation will be required to substantiate all applications for a rebate or refund. To learn more, refer to our NRST rebates and refunds webpage. Tax avoidance and offences All transfers of land in Ontario are subject to audit. Anti-avoidance provisions will be enforced to ensure the NRST is reported and paid as required. This includes examining circumstances where Canadian citizens or permanent residents of Canada, as taxable trustees, hold property in trust for a foreign entity. This also includes preventing the use of multiple conveyances to avoid the NRST. Failure to pay the NRST as required may result in a penalty, fine and/or imprisonment.
"I anticipated these changes to have a significant impact" Says Scott, Mortgage Underwriter for LIVEHERE
The difference between hard and soft intensification as it relates to the City of Guelph's planning and zoning in Bill 23
"Having enough to eat is vital"
Take advantage of the market now to get started on your real estate journey, with help from Guelph REALTOR® Dave Neill.
To start, Dave recommends talking to an agent who has personal experience investing in the market—the same market you are interested in. This person should have gone through the process of advertising for and screening tenants, knows what the market rent rates are and will help ensure you get the most out of your rental income. Dave has over 20 years of personal experience buying, selling, renting and managing his own investment portfolio in the Guelph area, and it is that experience that provides the most value for his clients. “Your agent should also have a network of contacts who can solve problems that may come up, and the experience to help you solve them when they do,” he says. He doesn’t think you need to worry about finding a good tenant. “The easiest guarantee we can provide to clients is that their home will rent and there will be a strong supply of quality tenants who will happily pay their rent in exchange for a comfortable place to live,” says the REALTOR®. What to look for Savvy investors should look for properties that have the potential for revenue growth, or price appreciation. “I’ve always been drawn to the uniqueness of real estate,” says Neill. “Cool living spaces, large yards, sun exposure, Walk Scores, etc., are all unique aspects of real estate that can provide long-term value, both in attracting great tenants and obtaining top dollar when it is time to sell.” But how can you tell if an investment property will be profitable? You have to crunch the numbers. According to Neill, you should have a good handle on the prospective rental income, as well as your fixed costs for ownership, such as mortgage, insurance, tax and utilities. He also advises that you take a good, close look at the condition of both the interior and the exterior of the home to help you budget for future expenses; this can give you an idea of what might come up down the road. “There will always be something unexpected that comes up, so having a financial plan to cover those expenses is something you should prepare for. If those numbers don’t show a profit on a monthly, annual or a 5-year cycle, then you may want to look at a different opportunity,” says the REALTOR®. Helpful property investment services Companies like his not only help investors get started, they are available to assist throughout the ownership of the property. His business provides all of the services and information needed to get started, so you’re never going it alone. They stick around throughout the length of the ownership to ensure everything goes smoothly. Says Neill, “If you have a problem, then so do we—and we get to work to help you solve it.” Different levels of service are available. Those interested in turnkey investment services are totally hands-off for clients; they own the property, but LIVEHERE deals with leasing, maintenance and tenant communication. “We have clients whose tenants think that we own the property, since we are their only point of contact,” notes Neill. The Leasing-only services focus on finding and qualifying suitable tenants and handing them off to the landlord. For clients who want to save some money or be more hands-on in the process, they can take advantage of the guidance and support the team offers. Whenever you have a question, for as long as you own the property, that service is covered by the commission on the sale of the property. You can have the help of professionals who are on-call 24 hours a day to ensure that your investment continues to grow—for as long as you own it. Tips for success Neill’s best piece of advice for clients is “Don’t sell!” The investors who have the most success tend to be the ones who invest for the long term. He also cautions new investors not to spend money on a weekend seminar or a book series to learn how to invest. Neither are necessary for successful real estate investing. Says Neill, “Owning real estate can be frustrating at times, but it’s rare you will see someone who regrets making a purchase or investment 10 years later. We’re here to manage those frustrations for you and get you to that 10-year horizon—or longer—and make sure you’re glad you did.” The process starts with a conversation, which is always free. For more information on finding homes for sale in Guelph, Brantford, Elora, Fergus and Puslinch, including student rentals in and around the University of Guelph, connect with us here or call 519-760-9619
