Municipal Non-Resident Speculation Tax (MNRST)

Municipal Non-Resident Speculation Tax

On February 6 and 7, 2024, Toronto City Council adopted the introduction of a new Municipal Non-Resident Speculation Tax (MNRST) on Foreign Buyers of Residential Property which will take effect on January 1, 2025. 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. The MNRST rate of 10 per cent will apply on the full purchase price for foreign buyers of certain residential properties, in addition to the Municipal Land Transfer Tax (MLTT) in Toronto.

In 2017, the Province levied its own Non-Resident Speculation Tax (NRST) https://www.ontario.ca/document/non-resident-speculation-tax. The MNRST applies the same criteria to applicability, rebates, refunds and exemptions as the provincial NRST.

Find more information about the MLTT & MNRST programs.

Definitions

  • 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.

Or 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 the MNRST

The 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

In a situation involving the purchase of multiple condominium units, each unit is considered land containing one single family residence. MNRST does not apply to other types of properties such as:

  • multi-residential apartments
  • buildings with more than six units
  • agricultural land
  • commercial land
  • industrial land

Value of the Consideration

The MNRST is calculated on the “value of the consideration”, which is normally the amount paid for the land in addition to the remainder of any mortgage or debt assumed as part of the purchase agreement. For example, when purchasing a vacant lot with a construction contract, the value of the consideration is the total cost of the lot, plus the cost of the construction contract.
However, in certain cases, the value of the consideration is based on the “fair market value” of the land, such as where the transfer is of:

  • A lease with a term that can exceed 50 years,
  • Land from a corporation to one of its shareholders, or
  • Land to a corporation if corporate shares are issued.

Exemptions

Exemptions that apply to the provincial NRST also apply to MNRST.

To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.

Rebates

A rebate of MNRST may be available to foreign nationals who become permanent residents of Canada within four years of the date of the purchase or acquisition. MNRST becomes payable for all property transfers that are registered commencing January 1, 2025. Learn more about MNRST rebates.

Implementation and Collection

  • Consistent with the MLTT process, the City will work with Teranet Inc. and the Province in relation to the collection and enforcement of the MNRST and the sharing of information.
  • The MLTT & MNRST funds for foreign buyers are due upon registration of the property.
  • As part of the registration process, all taxpayers are required to make a declaration, or claim an exemption as to the MNRST liability.

The MNRST becomes payable for all property transfers that are registered commencing January 1, 2025.