Do you remember the Non-Resident Speculation Tax (NRST)—the significant 25 percent tax Ontario introduced to discourage foreign buyers from investing in the local real estate market? If that seemed excessive, there is now an additional financial burden: Toronto has added another 10 percent tax on top of it.
Canada has already made it extremely difficult for foreign nationals to purchase residential property. The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which took effect in 2023, introduced a complete ban on non-residents buying property in Canada until at least 2027. The only individuals who are still permitted to buy are temporary residents who meet strict conditions, such as certain work and study permit holders, refugees, and a limited number of other exceptions.
For those who still qualify, there is an additional obstacle: A total of 35 percent in taxes must be paid upfront. This includes 10 percent for Toronto’s new Municipal Non-Resident Speculation Tax (MNRST) and 25 percent for Ontario’s NRST.
If you are a foreign national considering a property purchase in Toronto, here is everything you need to know before making an extremely expensive mistake.
What Is the Municipal Non-Resident Speculation Tax (MNRST)?
The Municipal Non-Resident Speculation Tax (MNRST) is Toronto’s latest measure to address housing affordability concerns. City officials claim this policy is designed to deter speculative investment from foreign buyers and ease demand in the local market.
Here is an overview of what this tax entails:
- Effective Date: January 1, 2025
- Tax Rate: 10 percent of the purchase price
- Applies to: Foreign buyers acquiring residential properties in Toronto
- In Addition to: The existing 25 percent Ontario Non-Resident Speculation Tax (NRST)
In simple terms, if you are a non-resident buyer, you will be paying 35 percent in additional taxes on top of the property’s purchase price.
How Much More Will This Cost You?
A tax of 35 percent is a significant financial burden. Let us look at a real-life example.
Imagine you are a foreign investor considering purchasing a condominium in downtown Toronto valued at $1,000,000. Here is what you would be expected to pay:
| Cost Breakdown | Amount (CAD) |
|---|---|
| Purchase Price | $1,000,000 |
| Ontario NRST (25 percent) | $250,000 |
| Toronto MNRST (10 percent) | $100,000 |
| Total Cost (before closing costs, legal fees, etc.) | $1,350,000 |
This means that before even considering legal fees, land transfer taxes, and other closing costs, you would need an additional $350,000 just to cover the non-resident taxes.
Is this a justifiable investment? That is the question foreign buyers must now carefully consider.
Who Must Pay the Municipal and Provincial Speculation Taxes?
With the introduction of the Municipal Non-Resident Speculation Tax, buying property in Toronto has become even more costly for foreign buyers. But who exactly is affected?
If you are not a Canadian citizen or permanent resident, these taxes apply to you. The same goes for foreign corporations and taxable trustees purchasing residential real estate. The taxes cover most residential properties in Toronto, including detached and semi-detached houses, townhouses, and condominium units. Whether you are buying a home to live in or as an investment, if you do not hold Canadian citizenship or permanent residency, you will be subject to these additional costs.
It is also important to note that these taxes do not replace the standard Land Transfer Taxes that all buyers must pay in Ontario and Toronto. Instead, they are an additional financial burden exclusive to foreign buyers.
For many foreign buyers, this raises an important question: is it still worth investing in Toronto’s real estate market? Before answering that, it is essential to understand whether there are any ways to reduce this financial burden.
Who Can Avoid These Taxes?
While the municipal and provincial speculation taxes apply broadly to foreign buyers, there are certain cases where exemptions are available. The government recognizes that not every non-resident purchasing property in Canada is doing so for speculative purposes. Some buyers are in the process of making Canada their permanent home, while others may have strong personal or professional ties to the country. Because of this, specific groups may be eligible to avoid these taxes entirely.
These exemptions are designed for individuals who meet very specific criteria. They are not automatic and require buyers to provide legal proof of their eligibility.
- Nominees under the Ontario Immigrant Nominee Program (OINP) – If you have been nominated under this program and intend to become a permanent resident, you may be exempt.
- Protected persons (refugees) – If you have refugee status in Canada, you are not required to pay these taxes.
- Spouses of Canadian citizens or permanent residents – If you are purchasing the property jointly with your spouse, who is a citizen or permanent resident, you may be exempt.
To qualify for any of these exemptions, you must certify that the property will be your primary residence.
For anyone considering buying property in Toronto, understanding whether an exemption applies is critical. The difference could mean saving tens or even hundreds of thousands of dollars. However, the rules can be complex, and a misstep in paperwork or eligibility requirements could result in unexpected tax obligations. Seeking legal guidance before making a purchase is the best way to ensure that you are not paying more than necessary.
Can You Get a Refund on the MNRST and NRST?
For some foreign buyers, there is an opportunity to recover a portion of the additional taxes—but only under very specific conditions. If you become a permanent resident of Canada within four years of your property purchase, you may be eligible for a rebate on both the 25 percent Ontario Non-Resident Speculation Tax (NRST) and the 10 percent Toronto Municipal Non-Resident Speculation Tax (MNRST).
To qualify for a rebate, the following conditions must be met:
- You must become a permanent resident of Canada within four years of purchasing the property.
- The application for the rebate must be submitted within 90 days of receiving permanent resident status.
- The property must be owned solely by you or jointly with your spouse (who must also be a foreign national at the time of purchase).
- The property must be your primary residence from the time of purchase until the rebate application is submitted.
Given the strict requirements and short application window, it is essential to prepare for the rebate process well in advance. Any missing documentation or delays in submission could result in losing the opportunity to recover these taxes.
Is Buying in Toronto Still Worth It? Here is the Reality.
Toronto has sent a clear message to foreign buyers: if you are not a Canadian citizen or permanent resident, you will pay significantly more. With the introduction of the Municipal Non-Resident Speculation Tax, the cost of purchasing property as a foreigner has increased to 35 percent in additional taxes before considering closing costs, legal fees, and land transfer taxes.
The question remains—does it still make sense to buy? The answer depends on your long-term goals.
If you are planning to settle in Canada and eventually become a permanent resident, there is a possibility of receiving a rebate on these taxes. However, that process requires at least four years before you can even apply for a refund, and you must meet very strict conditions to qualify. If you are purchasing real estate purely as an investment, the financial appeal is not as strong as it once was. The government has made it clear that they are willing to introduce further restrictions, which increases the level of uncertainty for foreign investors.
That being said, every situation is unique. If you are committed to purchasing property in Toronto, there may be ways to reduce the tax burden and structure your investment more efficiently. However, the most important step is to seek expert legal guidance before making any financial commitments.
At MBLAW, we do more than explain the rules—we help you find strategic solutions tailored to your specific circumstances. If you are a foreign buyer navigating Toronto’s real estate market under these new regulations, we can provide the guidance you need to make an informed decision. A consultation with us could save you thousands—or even hundreds of thousands—of dollars.
Contact us today, and let us determine whether buying property in Toronto is the right choice for you.
