Move aims to curb foreign speculation on Toronto properties
Toronto mayor Olivia Chow’s executive committee has given the nod to a proposed tax targeting foreign buyers eyeing residential properties in the city. According to CP24, the move entails imposing a 10% tax on the value of purchased properties, slated to take effect on January 1, 2025, pending approval from the city council.
The decision stems from a strategic move aimed at curbing foreign speculation in Toronto’s housing market. The report said the proposed tax aligns with broader governmental efforts to alleviate housing challenges faced by existing residents grappling with affordability woes.
Earlier this year, Toronto City Council voted to boost the vacant home tax in a bid to discourage property owners from leaving residences unoccupied.
Ontario previously implemented a 25% Non-Resident Speculation Tax (NRST) for its residential properties in 2017. City staff now advocate for a Municipal Non-Resident Speculation Tax mirroring provincial provisions, following discussions with provincial counterparts in recent months.
If approved by the council, the new tax would coincide with the expiration of a federal ban on residential property purchases by non-Canadians at year-end. While primarily targeting foreign speculation in Toronto’s housing market, city staff estimates this could generate revenue gains of up to $15 million in the inaugural year, providing a much-needed financial boost for the city.
However, speaking with CP24, mortgage broker Elan Weintraub expressed scepticism regarding the tax’s efficacy in improving market dynamics. “So I think that foreign buyers just represent a very small component of the market. I don’t think it’s going to have an impact at all,” he said.
Weintraub suggested alternative measures that could impact the market, such as reducing development charges to bolster housing supply and potential rent hikes as landlords renegotiate mortgages at higher rates, despite assurances from the mayor regarding tax moderation on multi-residential properties.
Mayor Chow is poised to unveil a budget later this week, potentially incorporating a tax hike of up to 16.5% for most homeowners. However, Chow remains receptive to resident feedback, indicating a willingness to adjust proposed rates based on community input ahead of presenting the budget to the council.
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