(Bloomberg) -- Ontario is raising a tax on home purchases by some foreigners to 20% and removing exemptions as it seeks to cool a scorching real estate market.   

The so-called non-resident speculation tax will apply to homes bought anywhere in the Canadian province by foreign nationals and foreign companies, provincial Finance Minister Peter Bethlenfalvy said in a statement. Currently, the tax is 15% and applies only to homes in Toronto and surrounding areas.  

Foreign citizens can apply for a rebate if they become permanent residents of Canada within four years of paying the tax. But rebates will no longer be given to international students, or foreign nationals who are temporarily working in Ontario.

Home prices nationwide posted a record monthly surge in February as buyers piled into the market ahead of interest rate increases by the Bank of Canada. Benchmark home prices rose 3.5% last month from January, according to data from the Canadian Real Estate Association. 

In Toronto, the average sale price in February was C$1.3 million ($1 million), seasonally adjusted. The soaring cost of homes and rents has become a significant political issue in the province of about 15 million people, and Premier Doug Ford faces an election in June. 

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