Toronto City Council Adopts New Toronto Municipal Non-Resident Speculation Tax
On February 6th and 7th, 2024, the Toronto City Council approved a new Municipal Non-Resident Speculation Tax (MNRST).
The MNRST will be effective as of January 1, 2025, and be levied at a rate of 10% of the value of consideration for the purchase of property. In most cases, “value of consideration for the purchase of property” or “valuable consideration” will be the purchase price.
According to the Report for Action dated January 16, 2024 proposed by the City’s Chief Financial Officer and Treasurer, 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 City anticipates that the MNRST will result in up to $9.6 million in potential revenues in 2025.
The implementation design of the tax will largely mirror the Provincial Non-Resident Speculation Tax (NRST) regime. The same exemptions (Nominees, Protection Persons, and Spouses) and rebates (Permanent Residents) may be available for the MNRST as with the NRST. The final tax design and implementation procedures will eventually be presented for approval and incorporation into the City of Toronto Municipal Code.
With the implementation the MNRST, all levels of government have now introduced measures in order to curtail foreign speculation in Canadian real estate. It is not yet clear what the long-term effects of these measures will be for the Canadian, Ontario, and Toronto real estate markets. However, this much is certain: buyers who are looking to purchase a property in the City of Toronto must properly educate themselves and determine whether or not they will be subject to the MNRST on closing.
Author:
Min Ju (Jennifer) Park
Partner