Investing Strategies

A thought on the new Ontario policy: NRST

 

 

It’s finally feeling more like SPRING!  I can’t believe that we are getting some warm weather at last.  Now that Spring is finally upon us, nature has finally decided to show up with all the green leaves decorating the trees and branches while the buds and flowers are in full blossom.  I hope you too are having a fantastic year thus far.

I’m going to assume most of us have heard about the new Ontario policy they introduced late April last month: the Non-Resident Speculation Tax (NRST). 

For those who haven’t, you can find more information at:  http://www.fin.gov.on.ca/en/bulletins/nrst/nrst.html

In a nutshell, it’s the Ontario Government’s measure to stop speculation in hope of calming the ultra hot real estate market and unbelievable gain on home prices.   As a long time real estate investor, I don’t tend to debate about the policy or fight against although I may disagree with them.  I just think it’s smarter to adapt to the market and profit from it.  “Go with the flow” is what I often say because you can’t really change it anyway.

In terms of this new policy, I actually think the NRST will benefit our local investors by reducing the foreign competition.  Although I believe there are many loop-holes that a NR can still do with the proper guidance from experienced lawyer and tax accountant but since I’m not a NR investor, I won’t comment on the loop-holes.

Based on my evaluation of this policy, I think the following trends will emerge from the new NRST:

  1. Since NRST doesn’t apply to commercial properties so I think the smaller commercial investment properties will be more in demand by these NR investors.  Especially, multi-residential building with 6 units and up.
  2. NRST only applies to the GGH – Greater Golden Horseshoe area so if you are investing elsewhere in Southern Ontario, like London, Sarnia, Windsor, or Durham regions, you might see more investors buying up properties in those regions.  Windsor is already a hot spot for out-of-town investors from Western Canada.  I don’t think it’ll take long for NR investors to start investing there as well.
  3. A more balanced market should be seen in the near future with the help of the new NRST policy so that more local investors and home buyers could finally start getting into the market with less fear of crazy bidding wars, coming mostly from foreign investors and speculators.

Regardless of new or old policies, in my point of view, speculation is not something I recommend especially to those starting out … instead, take the time to learn more about your market of interest and do your due diligence instead of plunging into the game of gambling on real estate in hope for unforeseen appreciation.

I hope you find my insight useful.  For more information on more real estate investing, feel free to contact us at CE Properties and we will be more than happy to help you!  Happy investing!

 

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