Foreign Buyer Taxes in Toronto: NRST and MNRST Explained

Foreign Buyer Taxes in Toronto: NRST and MNRST Explained

How much tax does a foreign buyer pay on a Toronto home?

When a foreign buyer purchases a home in Toronto, many people think only of “25% of the price.” Since 2025, however, that has changed. With the City of Toronto introducing a separate additional tax, the speculation tax a foreign buyer faces now adds up to 35%. Much of the information still circulating hasn’t caught up with this change, so here is where things actually stand today.

First, who counts as a “foreign buyer”?

The “foreign national” these taxes refer to is an individual who is neither a Canadian citizen nor a permanent resident of Canada. Permanent residents and citizens are therefore not treated as foreign buyers and are not subject to the NRST or the MNRST. Temporary residents here on a work or study permit, on the other hand, are foreign nationals — they hold neither citizenship nor permanent residence — and so, as a rule, they are liable for these speculation taxes. Beyond individuals, foreign corporations (incorporated outside Canada or controlled by a foreign entity) and taxable trustees (a trust with at least one foreign trustee or beneficiary) are also within scope.

Ontario’s Non-Resident Speculation Tax (NRST) — 25%

The NRST (Non-Resident Speculation Tax) is a provincial tax that applies when a foreign national, foreign corporation, or taxable trustee acquires residential property. The rate is 25% of the purchase price and has been in effect since October 25, 2022.

It applies across the Greater Golden Horseshoe — the region centred on the Greater Toronto Area (GTA) and extending to Hamilton, Niagara, Waterloo, Barrie/Simcoe and the surrounding areas. In other words, most of southern Ontario, including Toronto, is covered.

Toronto’s added Municipal Non-Resident Speculation Tax (MNRST) — another 10%

Effective January 1, 2025, the City of Toronto introduced its own additional speculation tax, the MNRST (Municipal Non-Resident Speculation Tax). When a foreign buyer acquires residential property within Toronto, a Toronto MNRST of 10% is charged on top of the provincial NRST of 25%.

As a result, the speculation tax a foreign buyer pays in Toronto comes to a combined 35%. For example, a foreign buyer acquiring a $1 million home in Toronto incurs $350,000 in speculation tax alone (NRST $250,000 + MNRST $100,000). The MNRST applies to residential property containing at least one and not more than six single-family residences, such as detached houses, semi-detached houses and townhouses.

Land transfer tax is separate

It is important to note that these speculation taxes are separate from the ordinary land transfer taxes. When you buy a home in Toronto, the provincial Land Transfer Tax and the Toronto municipal land transfer tax each apply, and they are added on top of the NRST and MNRST. A foreign buyer’s true total cost therefore has to account for the 35% speculation tax and the ordinary land transfer taxes on top of the purchase price, along with closing costs such as legal and registration fees.

Refunds and exemptions — confirm your eligibility in advance

The speculation tax may be refundable if certain conditions are met. For both the MNRST and the NRST, a foreign buyer who becomes a permanent resident of Canada within four years of the purchase may qualify for a refund (for the NRST, the application must be made within 90 days of becoming a permanent resident). The earlier NRST rebates based on a period of work or study have been eliminated and no longer apply.

There are also exemptions. Under the City of Toronto’s rules, the MNRST exemptions cover a nominee under the Ontario Immigrant Nominee Program (OINP), a protected person, and a foreign national who purchases jointly with a spouse who is a Canadian citizen, permanent resident, nominee or protected person. That said, refund and exemption eligibility varies significantly with the buyer’s status, residency requirements and the structure of the transaction, so it is safest to confirm eligibility before the purchase.

Check your eligibility to buy, too

Separate from tax, a federal law — the ban on the purchase of residential property by non-Canadians — is in effect and has been extended to January 1, 2027. Certain exceptions are recognized, such as for work permit holders, but they must meet detailed requirements, including sufficient time remaining on the permit as of the closing date. Failing to check both purchase eligibility and the tax burden together can lead to unexpected problems after the agreement is signed.

Don’t overlook the Vacant Home Tax (VHT)

Once you own a home, there is one more tax to keep on your radar every year: Toronto’s Vacant Home Tax (VHT). Owners of residential property in Toronto must file an annual declaration of the property’s occupancy status even if they live in it or rent it out; if no declaration is filed, the property is deemed vacant and can be taxed. The declaration deadline falls around April 30 of the following year, the tax applies to homes left vacant for more than 184 days in the year, and the rate is 3% of the property’s assessed value (based on MPAC). A false declaration or a failure to declare can result in a fine of up to $10,000 on top of the tax.

Review the legal and tax sides together before you buy

For a foreign buyer, acquiring a home in Toronto is no longer simply a matter of “the 25% speculation tax.” The combined 35% speculation tax (NRST 25% plus MNRST 10%), the separate land transfer taxes, the eligibility requirements to purchase, and the vacant home tax that follows ownership are all intertwined. Looking at each piece in isolation leaves gaps, and refund and exemption possibilities in particular depend on how the purchase is structured beforehand.

At Jenna Lee Law, a principal lawyer who is also a qualified CPA reviews the legal steps of a real estate transaction together with the tax side, in one place. If you would like to confirm your eligibility, expected taxes, and refund or exemption options in advance, an initial consultation will help point you in the direction that fits your situation.

References (official sources)

※ This article is provided for general information only and does not constitute legal or tax advice for any particular matter. Rates, effective dates and refund requirements are current as of the date of writing and may change without notice. Before proceeding with a transaction, please contact Jenna Lee Law directly for advice tailored to your specific circumstances.