Non-Resident Speculation Tax and the Federal Foreign-Buyer Ban

Two distinct regimes restrict or tax foreign purchasers of Ontario residential real estate. They operate independently and can both apply to the same transaction:

1. Ontario's Non-Resident Speculation Tax (NRST) — a provincial tax on foreign buyers.
2. The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act — a federal ban that makes certain purchases unlawful outright.

Part 1 — Non-Resident Speculation Tax (NRST)

Rate and scope

The NRST is 25%, effective October 25, 2022 (it was previously 20%, and 15% before that). Verify the current rate at ontario.ca/document/non-resident-speculation-tax. It applies anywhere in Ontario (before March 30, 2022 it applied only to the Greater Golden Horseshoe region; it is now province-wide).

The NRST is charged in addition to the general Ontario Land Transfer Tax and is calculated on the value of consideration for the residential property.

Who it applies to

The tax is levied when a foreign entity or taxable trustee buys designated residential land:

• Foreign nationals — individuals who are not Canadian citizens, not permanent residents of Canada, and not registered as an Indian under the Indian Act (Canada).
• Foreign corporations — corporations not incorporated in Canada, or Canadian-incorporated corporations that are controlled by a foreign national or other foreign corporation and are not publicly listed on a Canadian stock exchange.
• Taxable trustees — a trustee that is a foreign entity, or a trustee holding for a beneficiary that is a foreign entity.

What property is caught

NRST applies to designated land containing at least one and not more than six single-family residences — including detached and semi-detached houses, condo units, townhouses, and duplexes through sixplexes, as well as cottages. As of March 27, 2024, associated parking and storage units in a condominium are also caught. Verify scope at the source.

Rebates and exemptions

Rebate and exemption categories exist but are narrow and have strict conditions (verify current criteria at ontario.ca):

• Permanent resident rebate — available where the foreign national becomes a permanent resident of Canada within four years of the date the conveyance was registered.
• Industrial-use rebate — for qualifying conveyances on or after November 6, 2025 where residential property is repurposed for industrial use.
• Exemptions — may apply to a nominee (confirmed under the Ontario Immigrant Nominee Program), a protected person / refugee, or the spouse of a Canadian citizen or permanent resident purchasing jointly. Standard Land Transfer Tax exemptions can also apply.

Historical note: some earlier NRST rebates (such as the international student and foreign-worker rebates) were closed to new applications for transactions after March 30, 2022. Always confirm which rebates are currently open.

Part 2 — Federal Prohibition on the Purchase of Residential Property by Non-Canadians Act

What it is and its current status

This federal Act prohibits (rather than taxes) most non-Canadians from purchasing residential property. It came into force January 1, 2023. Originally a two-year measure, it was extended by two years to January 1, 2027 (announced February 4, 2024). Verify the current end date at canada.ca / cmhc-schl.gc.ca, as further extension or repeal is possible.

Who it applies to

A non-Canadian means:

• An individual who is neither a Canadian citizen, nor a person registered under the Indian Act, nor a permanent resident;
• A corporation not incorporated in Canada; and
• A corporation incorporated in Canada but controlled by a non-Canadian and not listed on a Canadian stock exchange.

What it prohibits, and where

It bans non-Canadians from directly or indirectly purchasing residential property. "Residential property" covers buildings with up to three dwelling units and parts of buildings such as semi-detached houses and condominium units. Buildings with four or more units, purely commercial property, and (since March 27, 2023) vacant land are outside the ban.

Geographically, the prohibition applies only within a Census Metropolitan Area (CMA) or Census Agglomeration (CA) — broadly, larger population centres. Residential property outside a CMA or CA is not covered. Verify boundaries at cmhc-schl.gc.ca.

Key exceptions

The prohibition does not apply, among other cases, to:

• Acquiring an interest through death, divorce, separation, or a gift.
• A non-Canadian renting a dwelling to occupy it.
• A creditor exercising a security interest (e.g., foreclosure).
• Purchases for the purpose of development.
• Certain temporary residents, subject to strict conditions — for example, work-permit holders with sufficient authorization remaining, and international students meeting tax-filing, physical-presence, and price-cap conditions. Refugees and protected persons may also be excepted. Verify the exact conditions at cmhc-schl.gc.ca, as they have been amended.

Penalties

A non-Canadian — or anyone who knowingly assists one (which can include agents, lawyers, and lenders) — who is convicted of violating the prohibition can be fined up to $10,000. A court may also order the sale of the property. On a court-ordered sale, proceeds first cover sale costs and any penalty; the non-Canadian recovers no more than the price they paid, and any surplus goes to the Receiver General for Canada. Importantly, a violating purchase is not automatically void — title can still transfer — so the penalty and forced-sale regime, not invalidation, is the enforcement mechanism. Verify at canada.ca.

How the two regimes interact

A single foreign buyer of an Ontario home in a covered urban area may face both: the purchase could be unlawful under the federal ban and, if it proceeds via an exception, still attract the 25% NRST. Because definitions of "foreign"/"non-Canadian," covered property, and geography differ between the two regimes, each must be checked separately for any given transaction. This document is a starting reference only — confirm current rules with the Ontario Ministry of Finance, CMHC, and qualified legal/tax advisors.