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Originally published in March 2024. This article reflects the policy environment and announcements in place at that time.
In February 2024, Toronto City Council approved a new Municipal Non-Resident Speculation Tax, or MNRST, on certain residential property purchases by foreign buyers.
Council approved a rate of 10% of the purchase price, with the new municipal tax scheduled to take effect on January 1, 2025.
The measure added another potential transaction cost for affected foreign buyers purchasing residential property in Toronto.
What Was Toronto's MNRST?
The Municipal Non-Resident Speculation Tax was designed as an additional Toronto tax on certain residential real estate purchases by foreign buyers.
It was approved in addition to Toronto's existing Municipal Land Transfer Tax rather than replacing it.
The City described the measure primarily as a policy tool intended to discourage speculative foreign purchases and support the availability of residential housing.
Additional information about the tax design was published by the City of Toronto .
Ontario's Provincial Non-Resident Speculation Tax
Toronto's municipal tax was separate from Ontario's existing Non-Resident Speculation Tax, or NRST.
At the time of the 2024 announcement, Ontario's NRST was 25% of the purchase price for applicable transactions involving certain foreign entities and taxable trustees.
The Toronto MNRST was designed to apply in addition to existing land-transfer-tax obligations where the applicable requirements were met.
The Federal Foreign-Buyer Restrictions
The municipal announcement also came while Canada's federal restrictions on purchases of certain residential property by non-Canadians were in force.
These different rules operated independently.
A foreign investor therefore needed to consider federal purchase restrictions, provincial tax rules, and Toronto municipal transaction taxes rather than assuming that one measure replaced the others.
Our broader guide to whether foreign investors can buy property in Canada explains the federal framework separately.
Why Toronto Introduced the Tax
According to the City's 2024 report, the primary objective of the MNRST was to discourage foreign purchases made for speculative purposes rather than to maximize municipal tax revenue.
The policy reflected a broader concern that speculative demand could place additional pressure on Toronto's already constrained housing market.
The Other Side of the Housing Affordability Debate
Trevor Valade, Vice President of LandLord, argued that restricting or taxing foreign investment addressed only one part of Toronto's housing problem.
His broader concern was housing supply.
Taxes intended to reduce speculative demand do not themselves create new homes. Improving affordability also requires additional housing inventory, including purpose-built rentals and a greater variety of housing types.
One approach Toronto has increasingly explored is multiplex and missing-middle housing , which adds units within established low-rise neighbourhoods.
Development Policy Also Matters
The development side of the affordability debate raises a different set of questions.
Adding new rental housing requires land, design, approvals, permits, financing, construction capacity, and a development model that remains economically viable.
Faster and clearer approval processes can therefore be as relevant to housing supply as policies intended to moderate demand.
Our multiplex Design-Build work focuses on how additional low-rise rental housing can be created on individual Toronto properties.
MNRST Is Different From Non-Resident Rental Income Tax
The Municipal Non-Resident Speculation Tax is a property-purchase tax.
It should not be confused with the Canadian income-tax rules that can apply when a non-resident already owns Canadian property and receives rental income.
Those owners face a separate withholding and reporting framework involving non-resident rental income, NR4 reporting, Form NR6 where applicable, and the optional Section 216 tax-return process.
Our non-resident landlord tax guide explains those rental-income obligations.
What the 2024 Announcement Meant for Foreign Buyers
For an affected foreign buyer considering Toronto residential real estate, the announcement reinforced the importance of evaluating the complete acquisition cost before entering into a transaction.
Purchase price alone does not represent the total capital required.
Land-transfer taxes, non-resident taxes, financing, legal costs, property condition, rental economics, and applicable purchase restrictions all need to be considered together.
Foreign buyers evaluating an investment should therefore obtain appropriate legal and tax advice and work with real estate professionals familiar with investment-property transactions.
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