With more newcomers to Canada seeking prosperity for themselves and their families, many of them are earning good income and want to purchase a house. Unfortunately, if they don’t have their Canadian Citizenship or Permanent Resident status, it can be incredibly expensive due to the Non-Resident Speculation Tax (NRST).

We’ve helped newcomers avoid the NRST by using Rent-To-Own.

(1) What is the Non-Resident Speculation Tax (NRST)?

Also called the Foreign Buyer Tax, the NRST is a 25% tax applied on the purchase of a residential property located anywhere in Ontario by individuals who are foreign nationals (individuals who are not Canadian citizens or permanent residents of Canada). The 25% tax is due upon closing.

(2) What is Rent-to-Own (RTO) in Canada?

Rent-to-Own is an agreement where you rent a home with the option to purchase it later. A portion of your rent goes towards the down payment, allowing you to build equity while renting. I’ve created a video that goes over the 20 most common questions I get about Rent To Own.

(3) How does Rent-to-Own help me avoid the Non-Resident Speculation Tax (NRST)?
With Rent-to-Own, you rent the home you want to eventually purchase, but you delay the purchase until you establish residency. Therefore, you will not be subject to the NRST when you buy the property.

(4) How long does a typical Rent-to-Own contract last?
Most Rent-to-Own agreements last between 2 to 4 years. The timeframe gives you a chance to improve your residency status or finances before finalizing the purchase.

(5) What happens if my RTO contract is for 3 years but I get my PR status before my 2^nd year in the RTO contract is complete?
In the contact, we include an early exit clause at the 2-year mark.

(6) Do I need a down payment for a Rent-to-Own agreement?
For a 2-yr contract, we require at least $15,000 in down payment. For a 3 year contract, we require at least $10,000. This gives you enough time to build up a bigger downpayment.

(7) What happens if I decide not to purchase the home at the end of the Rent-to-Own contract?
If you choose not to purchase, you risk forfeiting up to 90% of your original down payment and option credits. The amount you forfeit will depend on several factors such as reason for not purchasing and whether you were an excellent tenant or if there were constant issues.

(8) Is using Rent-To-Own to avoid paying the NRST legal?

Yes. There is nothing illegal about renting and deferring the purchase until you have obtained your residency status. We have worked with clients that have gone through this process.

(9) Is there a government website with more information?

Yes. You’ll find more information about it on the Ontario government website here: https://www.ontario.ca/document/non-resident-speculation-tax

(10) Where can I find more information about Rent To Own and the NRST?

I’ve created a video that covers the following topics.

• What is the NRST
• What is Rent To Own
• Is Rent To Own a good fit for you?
• Client story with the numbers

Next Steps

If you (or someone you know) is interested in home ownership but can’t afford the NRST, we might be able to help.

The first thing I suggest is to find out if you’re exempt. If you’re unsure, talk to a lawyer who has experience handling cases with immigrants and home purchases

If you’re not exempt, but are still interested in earning home ownership in a predictability manner that won’t hurt your budget, fill in this form and I’ll be happy to speak with you to see if I can help.