We’re already well into March 2023. I hope you are always healthy. Recently, many customers have been contacting us without knowledge of changes to this year’s real estate policies, so even though it’s late, we’ve organized it again, so please refer to it.
- Anti-Flipping Tax (from January 1, 2023)
- To suppress residential real estate speculation, it will apply to real estate transactions after January 1, 2023.
- If you resell real estate within 12 months of purchasing it, it will be considered speculation rather than investment, and the entire profit will be taxed as 100% business income.
- General investment real estate held for more than 12 months will be taxed based on 50% of the profit.
- Exemptions from the Anti-Flipping Tax
- In case of the owner’s death
- In case of the owner’s physical disability
- In case of childbirth
- In case of job relocation to another region
- In case of divorce
- Ban on Foreigners Purchasing Canadian Real Estate (from January 1, 2023, for 2 years)
- Until March 2022, foreigners could buy or pre-purchase residential properties in the Greater Toronto Area and surrounding areas by paying an additional 15% foreign acquisition tax on the purchase price. After that, the real estate acquisition tax increased from 15% to 20% and then to 25% from November 1, 2022. From January 1, 2023, foreigners are prohibited from purchasing real estate for 2 years.
- Real estate that is subject to the ban: residential condominiums, houses, townhouses, pre-sales, and real estate transactions. Who is subject to the ban: general foreigners, overseas corporations, foreign-owned Canadian corporations.
- Who is exempt from the ban: citizens, permanent residents, refugees.
- If the legal spouse is a citizen, even foreigners can purchase jointly.
- Qualifications, Purchase Prices, and Areas for Foreigners to Purchase.
- Work permit holders who have filed income tax returns for the past 3 years before purchasing real estate 4 years prior
- Student visa holders who have lived in Canada for at least 240 days per year for 5 years
- Maximum purchase price for real estate: within $500,000
- Areas where foreigners can purchase real estate: areas with a population of fewer than 10,000, resort areas in the suburbs, and vacation spots
- Vacant Home Tax (VHT, only applicable in Toronto)
- Only applicable in Toronto and not in GTA cities such as half, Richmond Hill, Mississauga, Markham, Oakville, etc. VHT reporting ended in February this year, so please prepare for next year’s reporting.
- If you leave a residential property vacant for more than 6 months a year, you will be subject to the tax.
- Exemption targets for vacant house tax
1) If the owner actually resides in the property.
2) If the owner’s family or friends, with permission, have lived there for over 6 months.
3) If the tenant listed in the lease agreement has resided there for over 6 months.
- Additional exemption targets for special cases
1) In the event of the owner’s death.
2) In the event that the property is undergoing renovations, making it uninhabitable.
3) In the event that the owner is unable to reside there (e.g. hospitalization).
4) During the legal transfer of ownership registration.
5) In the event of job relocation to another area.
6) By court order.
- If an individual or representative fails to report within the deadline or submits a false report, a fine of up to $10,000 may be imposed
- If you do not have a property tax notice and do not know your Roll Number or Account Number when reporting, you can find out by entering your address into Toronto’s “Tax and Utility Certificate Service” (see link below)
If you have any further questions, please do not hesitate to contact us again.