Foreign buyers who are drawn into the hot real estate market of Toronto are in for a wake-up call in 2026. Toronto has set up its own Municipal Non-Resident Speculation Tax, which is a 10% Municipal Non-Resident Speculation Tax (MNRST) charged based on the price of the property. The trigger is clearly set for non-residents.
In essence, the 10% MNRST is a message from Toronto that says, in no uncertain terms, that foreigners are unwelcome in the Toronto real estate market.
The problem with the policy is that it is absolute and does not take into consideration any contracts that are already in place. Contracts are made years before closing, and the 10% MNRST does not make any provision for that. Therefore, a foreign buyer who made a contract for a condo in 2022, with a closing date of 2026, in downtown Toronto, is suddenly slapped with the 10% tax.
The ripple effects of the policy are evident in the pre-construction market of Toronto. The policy makes it very difficult for foreigners to save for their dream homes in Canada, as they are expected to raise money for a pre-construction home, which is approximately $80,000–$200,000. Therefore, foreigners are opting for assignment contracts, where they can offload the contracts to domestic buyers.
The argument of those who are for the policy is that it is a tough policy that is necessary for the protection of Toronto’s housing stock and for the use of the revenue from the MNRST for affordable housing.
In essence, by 2026, the total tax burden of approximately 35% is already changing the real estate scene in Toronto. The message from Toronto is very clear: Toronto real estate is for Torontonians only, and participation is only for those who live and work in the city.