Foreign Buyer Tax Toronto: NRST + Federal Ban Explained (2026)

Ontario's Non-Resident Speculation Tax (NRST)

Ontario introduced the NRST in April 2017 at 15%, raised it to 20% in March 2022, and to 25% in October 2022. The current rate, applicable province-wide since 2022, is 25% of the purchase price.

NRST applies to the purchase of designated land — including residential property with one to six single-family residences — by:

• An individual who is not a Canadian citizen or permanent resident, or
• A foreign corporation, or
• A taxable trustee.

If a Canadian and a non-Canadian buy together, the NRST applies to 100% of the purchase price — not just the non-Canadian's share. The Canadian co-purchaser is jointly liable.

The official source is the Ontario Ministry of Finance. Verify rates and rules at ontario.ca/page/non-resident-speculation-tax before closing.

Federal Prohibition on Purchase by Non-Canadians

The federal Prohibition Act took effect January 1, 2023, and has been extended — the original two-year ban was extended by two more years in 2024, taking it through January 1, 2027 (verify the current end date; further extensions are possible). The Act prohibits non-Canadians from purchasing residential property in Canada, subject to a number of exemptions.

Penalty for breaching the Act: up to $10,000 fine and a court-ordered sale of the property.

Definitions are narrower than they sound. "Residential property" includes detached, semi-detached, rowhouse units, and condominium units. The Act applies in census metropolitan areas (CMAs) and census agglomerations (CAs) — which captures Toronto entirely.

Who is exempt from the federal ban

Key exemptions to the federal Act — not exhaustive, and the regulations have been amended multiple times:

• Canadian citizens and permanent residents (not subject to the Act).
• Refugees and refugee claimants who meet certain conditions.
• Temporary residents who meet specific work or study conditions (e.g. valid work permit with at least 183 days remaining, certain study permit conditions).
• Spouses or common-law partners of Canadian citizens / PRs purchasing jointly.
• Vacant land and certain commercial uses.

The 2024 regulatory amendments expanded the work-permit exemption (lower threshold than the original 2023 regs). Always verify the current regulation text with your lawyer before signing — the rules have shifted twice already.

Who is exempt from Ontario NRST

NRST exemptions are tighter than the federal Act's. The main ones:

• Nominee program: foreign nationals nominated under the Ontario Immigrant Nominee Program (OINP) who certify they will apply for permanent residence.
• Protected persons / refugees: those granted protected-person status under federal law.
• Spouse of a Canadian citizen / PR: when the non-resident purchases with their spouse who is a Canadian citizen, PR, nominee, or protected person.

NRST rebates were narrowed significantly in March 2022 — the rebate that previously applied to foreign nationals who became PRs within four years is no longer available for transactions after March 29, 2022. The current rebates are very limited.

The interaction: how the two rules stack

For most non-Canadians considering a Toronto condo in 2026:

1. The federal Act is the first hurdle — if you can't legally buy, the NRST conversation is moot.
2. If a federal exemption applies (e.g. valid work permit with remaining time), Ontario's NRST is a separate question. NRST may still apply.
3. If both apply, the 25% NRST is on top of all standard closing costs — on a $1M condo, that's $250,000 in additional tax.

This is why most non-Canadian buyers retain a Toronto real estate lawyer at the very first step — before even searching. Misreading the rules has very expensive consequences.

What changes for Canadian citizens and PRs

Canadian citizens and permanent residents are not subject to either rule. If you're a Canadian buying alone or with another Canadian / PR, neither the federal Act nor NRST applies. If you're a Canadian buying jointly with a non-Canadian spouse, the federal Act exemption typically applies but NRST analysis depends on the specific facts.

If you've recently become a PR, congratulations — you're not foreign for these purposes. Your lawyer will need to evidence the PR status at closing.

Other taxes that affect foreign owners

Two more federal taxes touch foreign owners:

• Underused Housing Tax (UHT) — a federal 1% annual tax on the value of vacant or underused residential property owned by non-Canadians (with broad reporting obligations for many Canadians too). Annual return required. Penalties for non-filing are significant.
• Toronto Vacant Home Tax — a 1% annual tax on properties declared (or determined to be) vacant for more than six months in the prior year. All Toronto owners must file an annual declaration.

Neither is "foreign-buyer" specific in name, but both disproportionately affect foreign owners and absentee landlords.