Canada’s most populated province Ontario has started taxing non-resident homebuyers by a huge 20%.
This means Ontario’s overseas buyers are being charged 10 times more tax on purchases than in the UK, which brought in a 2% stamp duty surcharge for foreign buyers last year.
This move to dissuade foreign investors mirrors the measures taken in the province of British Columbia, where a 20% foreign buyer tax is active in areas like Metro Vancouver.
Peter Bethlenfalvy, Ontario minister of finance, said: “Our government is working to increase supply and help keep costs low for Ontario families and homebuyers, not foreign speculators looking to turn a quick profit.”
Ontario first introduced an overseas buyers tax in 2017 at a rate of 15%, while that was only active in the south of the province – it’s now been expanded to the whole of Ontario.
The housing market is perceived as being overly hot in the likes of British Columbia and Ontario, as prices in Toronto rose from $CAD1 million in February 2021 to $CAD1.3 million this year. The tax rates get higher for costlier homes.
It’s now very expensive for overseas investors to buy properties cities like Toronto, as both the city and the province charge ‘land transfer tax’, with the overseas buyer tax standing on top.
Such is the level of these dissuasive taxes in Canada, it begs the question of whether the UK could increase its overseas buyers taxes.
That’s if the UK government wants to give residents a bigger advantage over people from overseas looking to park their cash.