RESOURCES

Foreign buyers of residential property in Toronto now face yet another tax to consider. In addition to the Provincial Land Transfer Tax, the City of Toronto’s Municipal Land Transfer Tax, and Ontario’s Non-Resident Speculation Tax (NRST), the Municipal Non-Resident Speculation Tax (MNRST) has been introduced.

MNRST took effect on January 1, 2025, which was adopted by the Toronto City Council on February 6 and 7, 2024. According to Toronto’s website dedicated to MNRST, “The primary objective of the MNRST is to safeguard and enhance the availability of residential housing supply and to maintain a level of affordability in the residential real estate market by discouraging international buyers from purchasing property in the City of Toronto, particularly those buyers who do not intend to live in the property, or where the purchase is for purely speculative motives.”

MNRST mirrors the structure, applicability, exemptions, rebates, and refund process of the Provincial NRST. The key difference is the rate:

• MNRST is charged at 10% of the purchase price
• NRST is charged at 25% of the purchase price (as of October 25, 2022)

This means that if a foreign buyer purchases a residential property subject to both NRST and MNRST, they will pay a combined 35% speculation tax—on top of the Provincial and Municipal Land Transfer Taxes.

Below are some key points to note about NRST and MNRST:

Entities Subject to NRST & MNRST

• A foreign national – defined in the federal Immigration and Refugee Protection Act as an individual who is not a Canadian citizen or permanent resident of Canada; or
• A foreign corporation – defined as a corporation that is incorporated outside of Canada or, in certain circumstances, is controlled by a foreign entity.
• A ‘taxable trustee’ is defined as either a trustee for:
  • A trust with at least one trustee that is a foreign entity; or
  • A trust with at least one beneficiary that is a foreign entity.

Types of Property Subject to NRST & MNRST

NRST & MNRST applies to the transfer of land which contains at least one and not more than six single family residences. Examples of land containing one single family residence include land containing:

• a detached house,
• a semi-detached house,
• a townhouse, or
• a condominium unit

Exemptions

An exemption from NRST & MNRST may be available for registered transfers if the transferee is a nominee, a protected person or a spouse of a Canadian citizen, a permanent resident of Canada, a nominee or a protected person.

Rebates

A rebate of NRST & MNRST may be available to foreign nationals who become permanent residents of Canada within four years of the date of the purchase or acquisition.

No Grandfathering Provision

One important and unexpected feature of the MNRST is that there is no grandfathering provision. Typically, new taxes exclude agreements signed prior to the tax’s effective date. However, in this case, even if a buyer signed the Agreement of Purchase and Sale in 2024, they will still be required to pay the MNRST if the closing occurs on or after January 1, 2025.

Not to forget – the Federal Foreign Buyer Ban!

It is also important to note that the Federal Foreign Buyer Ban is separate from NRST and MNRST. Before considering the applicability of NRST or MNRST, it must first be determined whether the foreign buyer is prohibited from purchasing residential property under the Federal Ban, or whether they fall under any of the exemptions provided in that legislation.

For more information about MNRST, please visit the following link – Municipal Non-Resident Speculation Tax (MNRST) – City of Toronto.

If you have any questions with regards to Toronto’s MNRST, or if you require assistance with your real estate transaction, we are here to help! Please feel free to reach out to our office at (905) 270-6660 or by email at info@kormans.ca. 

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