You see, buying a house in Ontario is already a huge financial stretch. When you throw in the down payment, the cost of the money you’ll be borrowing (the mortgage rate), and the closing costs, it can be a real punch in the wallet.
Unless you happen to be a Canadian citizen or a Permanent Resident, there is one more cost that you might not know about. It’s called the Provincial Non-Resident Speculation Tax. We’ll refer to it as NRST for the rest of the article.
This isn’t a small fee that we’re talking about. We’re talking about a whopping 25% that gets tacked right onto the price of the house. So if the house costs a million bucks, that means that there will be an additional 250 grand that needs to be paid up front. Cash.
This is one of the biggest surprises that many newcomers to the country end up facing. They know about the Ontario Land Transfer Tax that everyone has to pay, but they don’t know about the NRST. They end up in a panic to come up with the cash in the days leading up to the closing, only to end up losing the house in the end.
So what is the history behind the NRST? Well, the Ontario government decided that the real estate market was getting a little too hot in the past few years. They wanted to cool it down a little. They decided that one of the biggest problems was that many foreigners were investing in houses in Ontario as a way to park their money in the country. They wanted to keep that money in the country, but they weren’t using the houses that they bought. They wanted to keep them empty. The NRST was designed as a way to prevent that from happening. In the following article, we’ll go over exactly how it works and how it can be paid back.
What is the Non-Resident Speculation Tax?
The Provincial Non-Resident Speculation Tax is exactly what it sounds like. It is a provincial tax levied by the Ontario Ministry of Finance on foreign buyers purchasing residential property in the province.
Think of it as an extra land transfer tax. You still have to pay the regular provincial land transfer tax. If you buy in Toronto, you pay the municipal land transfer tax too. The NRST sits right on top of both of them.
The 25% Provincial Rate
The tax rate currently sits at 25%. It applies to the total value of the consideration for the property. Usually, that just means the purchase price.
This rate went through a few changes recently. Back in 2017, it started at 15% and only applied to the Greater Golden Horseshoe region around Toronto. Then the government hiked it to 20% and expanded it to the entire province. In late 2022, they bumped it again to the current 25%.
It applies everywhere in Ontario now. Buy a condo in downtown Toronto? You pay 25%. Buy a cottage up in Muskoka or a townhouse in Ottawa? You still pay 25%. There are no regional loopholes left in the province.
Toronto’s New 10% MNRST (2025 Update)
And just when you thought it could not get more expensive, Toronto changed the rules.
Effective January 1, 2025, the City of Toronto introduced its own Municipal Non-Resident Speculation Tax. This is called the MNRST. This is an extra 10% tax on top of everything else.
If you buy a house inside the city limits of Toronto as a foreign buyer today, you pay the 25% provincial NRST plus the 10% Toronto MNRST. That is a 35% tax rate just for the privilege of buying a home.
You might think the federal ban covers this. It does not. Well, it does, but they are separate laws entirely. I will explain the federal ban a bit later. Right now, just understand that buying in Toronto as a non-resident is punitively expensive.
Who Actually Pays the NRST?
The government uses specific legal terms to define who has to pay. The law states that the tax applies to foreign entities and taxable trustees.
Let’s break those definitions down into plain English.
Foreign Nationals
A foreign national is anyone who is not a Canadian citizen and is not a Permanent Resident of Canada.
If you are living in Ontario on a work permit, a student visa, or a visitor visa, you are a foreign national. If you buy a house, you owe the tax. It does not matter if you have lived in Ontario for five years, pay income taxes here, and have a steady local job. Without that Permanent Resident card or citizenship certificate, the 25% rule applies to you.
Foreign Corporations and Taxable Trustees
The tax also catches corporations. A foreign corporation is one that is incorporated outside of Canada.
Actually—scratch that. It is broader than that. Even if a corporation is registered right here in Ontario, it is still considered a foreign corporation for the NRST if it is controlled by a foreign national or another foreign corporation. You cannot just set up a quick Ontario numbered company to bypass the tax. The government looks right through the corporate structure to see who really pulls the strings.
A taxable trustee is a trust where at least one trustee is a foreign entity, or where at least one beneficiary is a foreign entity. If a foreign national is benefiting from the trust that buys the house, the trust pays the NRST.
Here is a trap a lot of people fall into. The tax applies to the whole purchase price even if only one buyer is a foreign national.
Imagine you are a Canadian citizen. You decide to buy a house with three friends. Three of you are citizens, but the fourth friend is on a work visa. Because that one friend is on the title, the entire property is tainted. The 25% NRST applies to 100% of the home’s value, not just your friend’s 25% share.
What Properties Trigger the Tax? (Designated Land)
The NRST does not apply to every single piece of dirt in Ontario. It specifically targets residential real estate.
The government calls this designated land. Designated land is any property that contains at least one and no more than six single-family residences.
This covers almost everything a normal person would buy. It includes detached houses, semi-detached houses, townhouses, and condominium units. It also includes duplexes, triplexes, fourplexes, fiveplexes, and sixplexes.
What is excluded? Commercial properties like retail stores and office buildings. Industrial land. Agricultural land.
It also excludes large multi-residential rental buildings. If you buy an apartment building with seven or more units, the NRST does not apply. The government actually wants people to build and buy large apartment buildings to help the housing crisis, so they do not hit those with the speculation tax.
If you buy a mixed-use property, things get slightly complicated. Say you buy a building with a retail store on the ground floor and an apartment on the second floor. The government will usually apportion the value. You would pay the NRST only on the value of the residential apartment portion, not the value of the commercial store.
NRST Exemptions: Can You Avoid Paying Upfront?
Nobody wants to hand over 25% of their home’s value to the government. There are a few very specific, narrow exemptions where a foreign national can buy a house and not pay the tax on closing day.
You must claim these exemptions right when you register the property.
OINP Nominees
The Ontario Immigrant Nominee Program, or OINP, is a popular path to permanent residency. If you have been officially nominated by the province under this program, you do not have to pay the NRST.
You need the actual confirmation of nomination document at the exact time you buy the house. You cannot just be in the application pool waiting for an answer. You also have to use the property as your principal residence.
Protected Persons
If the federal government has granted you refugee protection under the Immigration and Refugee Protection Act, you are exempt. Again, this requires official protected status at the time of the real estate transaction.
Spousal Exemption
This one saves a lot of families. If you are a foreign national, but you are buying a house jointly with your spouse, and your spouse is a Canadian citizen, a Permanent Resident, a protected person, or an OINP nominee, you are exempt.
Look, the key word here is spouse. And the property must only be in the names of the two spouses. If you buy the house with your Canadian citizen wife and your foreign national brother, the exemption is destroyed. The entire tax applies.
NRST Rebates: How to Get Your Money Back
Most people do not qualify for an upfront exemption. They have to swallow hard, get a massive draft from the bank, and pay the 25% tax.
But there is a light at the end of the tunnel. Ontario offers an NRST rebate. You can actually get your money back, with a little bit of interest, if you follow a very strict set of rules.
In the past, you could get a rebate if you worked in Ontario for a year or went to school full-time for two years. The government killed those options a while ago. Now, there is only one path to a refund.
The 4-Year Permanent Resident Path
You can get a full refund of the NRST if you become a Permanent Resident of Canada within four years of the date you purchased the property.
The clock starts ticking the day your real estate transaction closes. You have exactly 48 months to get through the federal immigration system, get your application approved, and officially land as a Permanent Resident.
If immigration delays your paperwork and you get your PR status on year four and one day, you get nothing. The deadline is absolute. The province does not care if the federal government was slow processing your file.
Once you get your PR status, you have 90 days to apply for the rebate with the Ontario Ministry of Finance.
The Strict Principal Residence Rule
Getting your PR card is only half the battle. The government wants to make sure you actually lived in the house.
To get the rebate, you must hold the property alone, or jointly only with your spouse. And you must occupy the property as your principal residence for the entire duration from within 60 days of buying it until the day you apply for the rebate.
You cannot buy the house, rent it out to university students for three years while you live in a cheaper apartment, get your PR, and then ask for the rebate. If you do not live in it, the government keeps your money.
They will check. When you apply for the rebate, the Ministry of Finance will ask for a massive pile of documents. They want utility bills, driver’s licenses, bank statements, and internet bills proving you physically lived at that address the entire time. If your hydro usage looks suspiciously low for a full-time resident, they will flag your file and likely deny the rebate.
NRST vs. The Federal Foreign Buyer Ban
It is easy to get confused by all the government rules targeting foreign buyers right now.
People often confuse the Ontario NRST with the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act.
Here is the difference. The federal law is an outright ban. It temporarily makes it illegal for non-Canadians to buy residential property anywhere in Canada until January 1, 2027.
The NRST is a provincial tax in Ontario.
You might be wondering how a tax exists if there is a total ban. The answer is that the federal ban has a lot of exceptions. For example, certain temporary workers holding valid work permits can buy a home under the federal rules if they meet specific conditions like having filed taxes in Canada for a certain number of years.
So, a temporary worker might be legally allowed to buy a house under the federal ban. But because they do not have Permanent Resident status yet, Ontario will step in and charge them the 25% NRST.
You have to satisfy the federal law to be allowed to buy, and then you have to deal with the provincial tax rules once you do.
Real-World Examples and Calculations
Let’s look at how the math plays out in the real world.
Example 1: The Temporary Worker in Ottawa
David is a software engineer from the UK working in Ottawa on a valid work permit. He meets the federal exceptions and is legally allowed to buy a home. He buys a nice detached house for $800,000.
Because David is a foreign national, the 25% NRST applies.
Purchase Price: $800,000 Regular Ontario Land Transfer Tax: $12,475 NRST (25% of $800,000): $200,000 Total tax bill on closing: $212,475
David pays the tax. Two years later, he receives his Permanent Resident status. Because he lived in the house the entire time and kept all his utility bills to prove it, he applies for the rebate and gets his $200,000 back from the province.
Example 2: The Investor in Toronto
A foreign corporation wants to buy a luxury condo in downtown Toronto as an investment to rent out to executives. The condo costs $1,200,000. They buy it after January 1, 2025.
Purchase Price: $1,200,000 Regular Ontario Land Transfer Tax: $20,475 Regular Toronto Municipal Land Transfer Tax: $20,475 Provincial NRST (25%): $300,000 Toronto MNRST (10%): $120,000 Total tax bill on closing: $461,425
The corporation pays almost half a million dollars just in taxes. And because a corporation cannot become a Permanent Resident or use a condo as a principal residence, they will never qualify for a rebate. That money is gone forever.
Frequently Asked Questions (FAQ)
How do I pay the NRST on closing?
Your real estate lawyer handles this. Usually, you wire the funds to your lawyer’s trust account a few days before closing. The lawyer then pays the Ministry of Finance directly when they register the deed electronically through the Teraview system. You do not mail a cheque to the government yourself.
Does the NRST apply to pre-construction condos?
Yes. You do not pay the tax when you sign the original builder agreement. You pay the tax years later on the final closing day when the title officially transfers to your name. The rules and rates in effect on that final closing day are usually what dictate your tax bill. If the rate goes up between signing and closing, you pay the higher rate.
What if I don’t have the money for the tax?
If you cannot pay the NRST and the regular land transfer taxes on closing day, the transaction will fail. You will be in breach of your purchase contract. The seller could keep your deposit and sue you for further damages. This is why you must calculate these taxes before making an offer on a house.
Can I appeal if my rebate is denied?
Yes. If your rebate application is rejected by the Ministry of Finance, usually on the grounds that they don’t believe you lived in the house as your main residence, you can lodge a formal Notice of Objection. This must be lodged within 180 days of receiving the denial letter.
It is a stressful process dealing with the Provincial Non-Resident Speculation Tax. It is a matter of a lot of money and deadlines set by the government. If you’re a foreign buyer interested in buying real estate in Ontario, it is a good idea to get some expert advice both from a tax expert and a real estate lawyer before signing anything. It is the only way to protect your savings.