So, if you want to buy a home in the Toronto area and you do not possess a Canadian passport or a Permanent Resident Card, the prices are quite shocking at the moment.
It is the year 2026, and the real estate industry in Toronto has undergone a significant change. On January 1, 2025, the real estate industry in the Toronto area was subjected to a hefty tax, which is called the Municipal Non-Resident Speculation Tax (MNRST). For foreign buyers, this tax is an additional 10% of the purchase price for a residential property.
This tax is in addition to the land transfer tax, which everyone is required to pay. So, it is an additional tax, if you can call it that. Let’s learn more about what this tax is, who is required to pay it, and how you can avoid it and get your money back.
What exactly is the MNRST?
The City of Toronto created the MNRST to cool down the housing market.
Real estate in the city was getting too expensive for locals. City council wanted a way to protect the local housing supply. They needed to keep homes available for people who actually live and work in Toronto.
So, they targeted international buyers. Specifically, buyers who purchase property for speculation or investment purposes without planning to lay down roots.
The tax rate is a flat 10% Toronto tax on the property’s purchase price. You pay it on the closing day. That is the exact same day you hand over the money for the house and get the keys.
Your real estate lawyer handles the transfer of funds. The city takes its 10% cut right then and there. There is no delaying it. You cannot set up a payment plan. The city wants the money upfront.
The effective date and the grandfathering trap
Here is where a lot of buyers are still getting a very nasty surprise in 2026.
The Toronto foreign buyer tax 2025 rollout was brutal. The tax took effect on January 1, 2025. You might think that if you signed your Agreement of Purchase and Sale back in 2023 or 2024, you are safe. That makes logical sense.
Usually, new laws have a grandfathering rule to protect old contracts.
But the city included absolutely no grandfathering provision for the MNRST.
This means if you signed a contract to buy a pre-construction condo four years ago, and it finally closes this week in 2026, you owe the 10% tax. It does not matter when you signed the papers. It only matters when the property officially changes hands.
If the closing date is on or after January 1, 2025, the city expects its money. I saw a buyer just last month who had to scramble to find an extra eighty thousand dollars right before closing. It is a stressful situation.
Who actually pays this 10% tax?
Not everyone pays the MNRST. It specifically targets foreign entities.
The city defines these entities in three different ways. You need to know exactly which category you fall into.
Foreign nationals
This is the most common category. A foreign national is simply an individual who is not a Canadian citizen and is not a permanent resident of Canada.
If you are here on a temporary work permit, you are a foreign national. If you are an international student studying at a local university, you are a foreign national. Visitors and tourists fall into this bucket too.
Until you officially secure that PR status, the city views you as an international buyer. You are subject to the tax. It is that simple.
Foreign corporations
You cannot just set up a company to buy the house and avoid the rules. The city thought of that loophole.
A foreign corporation is a company incorporated outside of Canada. But it also includes companies incorporated inside Canada if they are controlled by a foreign national or another foreign corporation.
Say you are a foreign national. You own all the shares of an Ontario numbered company. That company buys a house in Toronto. The company has to pay the Municipal Non-Resident Speculation Tax (MNRST).
The government looks right through the corporate structure to see who is really pulling the strings.
Taxable trustees
A trust is a legal arrangement where someone holds property for the benefit of someone else.
If a trust buys a home in Toronto, it has to pay the tax if even one trustee is a foreign entity. It also pays the tax if even one beneficiary of the trust is a foreign entity.
You cannot use a Canadian friend or relative to hold the property in trust for you to bypass the rules. If the ultimate beneficiary is a foreign national, the tax applies. The city is very strict about this.
What kind of property gets taxed?
The MNRST does not apply to every single piece of dirt in Toronto. It targets residential homes.
Specifically, it applies to land that has at least one, but no more than six, single-family residences.
This covers almost everything a typical person would buy to live in. Detached houses. Semi-detached houses. Townhomes. Duplexes. It also completely covers residential condominium units.
But it does not apply to everything.
If you are a foreign investor buying a massive 50-unit apartment building, the MNRST does not apply. If you buy a purely commercial property like a warehouse or a retail storefront, the tax does not apply. Agricultural land is also exempt.
The tax is laser-focused on the types of properties regular families want to buy.
The massive 35% tax hit: NRST vs MNRST
This is where the math gets genuinely scary.
The City of Toronto is not the only government taxing foreign buyers. The Province of Ontario has its own tax. It is called the Non-Resident Speculation Tax.
The provincial NRST is currently set at 25% of the purchase price. It applies everywhere in Ontario.
Because Toronto is inside Ontario, foreign buyers in Toronto get hit by both. The city charges its 10% MNRST. The province charges its 25% NRST.
That is a combined speculation tax rate of 35%.
Let’s run the numbers: Buying a $1 million home
Imagine you are a foreign national buying a small, one-million-dollar condo in downtown Toronto today. Let’s look at the tax bill.
First, you owe the provincial NRST. That is 25% of one million. So, you pay $250,000.
Then, you owe the Toronto MNRST. That is 10% of one million. So, you pay $100,000.
Right away, you are paying $350,000 just in foreign buyer speculation taxes.
And we are not done yet. You still have to pay the standard land transfer taxes that every single buyer pays, regardless of citizenship. Toronto has the Municipal Land Transfer Tax, or MLTT. Ontario has the Provincial Land Transfer Tax.
On a one-million-dollar home, those combined land transfer taxes are roughly $32,950.
So, to buy a one-million-dollar condo, you need to hand over $382,950 in cash to the government on closing day. That is almost 40% of the property’s value, gone instantly. You have to have that cash liquid and ready.
Are there any exemptions to the MNRST?
Yes, there are a few ways out.
The city adopted the exact same exemption rules as the provincial NRST. If you qualify for an exemption, you do not just get a refund later. You simply do not have to pay the tax at closing.
Your lawyer files the right paperwork. The tax is skipped entirely. This is obviously the best-case scenario.
The spousal exemption
This is a lifesaver for many couples.
If you are a foreign national, but you are buying the property jointly with your spouse, and your spouse is a Canadian citizen or permanent resident, you are exempt.
The spousal exemption is probably the most common way people avoid this tax.
The key here is that you must be legally married or common-law partners. And you must buy the property together. If you buy it alone, even if you are married to a Canadian, you might run into serious trouble.
Also, no third parties can be on the title. If you, your Canadian spouse, and your foreign parent all buy the house together, the exemption is destroyed. The entire property gets taxed. Keep the title clean. Just you and your spouse.
Protected persons
If you have been granted refugee protection under the federal Immigration and Refugee Protection Act, you do not have to pay the MNRST.
You are considered a protected person. The government recognizes that you are fleeing a dangerous situation and trying to build a new life here. They will not penalize you with a speculation tax.
Nominees
If you are a foreign national who has been nominated under the Ontario Immigrant Nominee Program, you might be exempt.
You need to have the physical certificate of nomination before the closing date. You also need to use the property as your principal residence. You cannot buy it as a rental property. You have to actually live in it.
How to get your money back: MNRST rebates
What if you do not qualify for an exemption at closing? You have to pay the massive 35% tax upfront. It hurts.
But there is a path to get that money back later.
The city offers a rebate program. Again, it mirrors the provincial rules. Getting a rebate takes time and patience, but it is worth it.
The permanent resident pathway
The most common way to get an MNRST rebate is by becoming a permanent resident. We call this the permanent resident rebate.
If you pay the tax on closing day, and then you become a Canadian permanent resident within four years of that purchase date, you can apply for a full refund.
But there are very strict conditions.
You have to move into the home within 60 days of buying it. And you have to live in it as your principal residence for the entire time until you get your PR status.
You cannot rent it out to students. You cannot use it as an Airbnb on the weekends. It has to be your actual, everyday home. The government will check. They will ask for utility bills and driver’s licenses to prove you lived there.
If you meet all the rules, and you get your PR card within that four-year window, you can apply to get your 10% back from the city. You can also apply to get your 25% back from the province. You get the principal amount back, plus a tiny bit of interest.
Wait, isn’t there a federal ban on foreign buyers?
You might be wondering why we are even talking about a foreign buyer tax right now. Didn’t the Canadian government ban foreigners from buying houses entirely?
Yes, they did. In 2022, the federal government passed a law prohibiting non-Canadians from buying residential property. That ban is currently set to expire in 2027.
So, how can you pay a tax on something you are banned from buying?
Because the federal ban has exceptions. For example, certain temporary workers and international students are allowed to buy property under the federal rules if they meet very specific criteria. They might have been working here for years and paying taxes.
But just because you are exempt from the federal ban does not mean you are exempt from the municipal and provincial taxes.
The truth is, those people who navigate the federal loopholes are exactly the ones who end up getting hit by the provincial NRST and the Toronto MNRST.
You are allowed to buy the house. But the government is going to make you pay dearly for the privilege.
What you should do before closing
The rules around buying property in Toronto as a non-resident are unforgiving.
If you are planning to buy real estate in the city and you are not a citizen or PR, do not sign anything without talking to a professional. The landscape in 2026 is full of traps.
You need to know your exact tax exposure before you put an offer on a house. You need to know if you qualify for a spousal exemption. You need to know if you have a realistic path to a permanent resident rebate.
If you miss a deadline, or if you put a non-qualifying family member on the title of the house, you could trigger a tax bill worth hundreds of thousands of dollars.
Speak with a real estate lawyer. Get your documents reviewed early.
With the MNRST, surprises are always expensive. Be prepared, do the math, and make sure your budget can handle the hit.