How Foreign Investors Can Buy Property in Toronto?

Here's what most foreign investors don't realize about Toronto real estate– the landscape changed dramatically in 2023 and continues evolving through 2025. While headlines scream "Canada bans foreign buyers," the reality is far more nuanced. The foreign buyer ban was extended to January 1, 2027, but there are numerous exemptions, and certain groups can still purchase property in Canada even if they are non-residents.

If you're looking to buy property in Toronto as a foreign investor, you're entering one of North America's most dynamic real estate markets during a particularly interesting period. In June 2025, the Greater Toronto Area's benchmark home price dropped to $995,100– a low not seen in the past four years. This represents both challenges and opportunities for international buyers who understand the regulations and know how to navigate them.

The key to success isn't just having the capital– it's understanding the exemptions, managing the additional taxes (which can add 35% to your purchase price), securing proper financing, and working with professionals who know how to guide foreign investors through Canada's unique regulatory environment. Let's break down exactly how you can successfully invest in Toronto real estate.

Understanding the Foreign Buyer Ban and Exemptions

The Current Regulatory Landscape

The ban on foreign ownership of Canadian housing, which was set to expire on January 1, 2025, has been extended to January 1, 2027. However, this doesn't mean all foreign investment is prohibited – far from it.

What the Ban Actually Covers:

• Residential properties, including houses, condos, and cottages

• Properties located in Census Metropolitan Areas (CMAs) with populations over 100,000

• Small residential buildings with fewer than 4 units

• Properties intended for residential use

  
  

What's NOT Covered by the Ban:

• Vacant land zoned for residential or mixed-use development

• Buildings with 4 or more residential units

• Commercial properties and mixed-use buildings

• Recreational properties outside major metropolitan areas

• Rural properties in smaller communities

  
  

Who Can Still Buy Despite the Ban?

Tech workers who hold TN visas can now buy one home in Canada, representing a significant opportunity for skilled workers in the technology industry. Beyond this, several exemption categories exist.

Key Exemptions for Foreign Buyers:

• Temporary Residents: Work permit holders, international students with valid study permits

• Permanent Residents: Those with PR status can purchase freely

• Refugees: Protected persons and refugee claimants

• Spouses/Common-Law Partners: Of Canadian citizens or permanent residents

• Diplomats: Foreign nationals working for foreign governments

• Property Inheritance: Those receiving property through inheritance or gift

• Developers: Building residential properties for sale

  
  

Temporary Resident Requirements:

• Must have filed tax returns for each of the last 5 years

• Must not have purchased a residential property as a temporary resident in Canada in the last 4 years

• Work permit holders can purchase one residential property

• International students can purchase one property valued under $500,000

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The True Cost: Taxes and Fees for Foreign Buyers

1. Non-Resident Speculation Tax (NRST)

Any individual who is not a Canadian citizen or permanent resident is subject to a Non-Resident Speculation Tax of 25% of the purchase price for properties purchased anywhere in Ontario. This represents one of the largest additional costs foreign buyers face.

NRST Key Details:

• 25% of the property purchase price

• Paid at closing on top of purchase price

• Applies to residential properties in Ontario

• Rebate available if you gain permanent residency within 4 years

• Exemptions exist for certain temporary residents

  
  

Example Cost Impact:

For a $1,000,000 property:

• Purchase price: $1,000,000

• NRST (25%): $250,000

• Total before other costs: $1,250,000

  
  

2. Municipal Non-Resident Speculation Tax

If approved by Toronto City Council, the municipal non-resident speculation tax (MNRST) would make foreign nationals pay an additional 10% on the purchase price of residential properties starting in January 2025.

MNRST Details (if implemented):

• An additional 10% of the purchase price

• Layered on top of existing provincial NRST

• Aimed at discouraging speculative purchases

• Expected to generate $14-15 million in city revenue

• Takes effect after the federal ban expires

  
  

3. Land Transfer Taxes

Foreign buyers pay the same land transfer taxes as Canadian residents when buying property in Toronto.

Toronto Land Transfer Tax Structure:

• Provincial Land Transfer Tax: 0.5-2% depending on property value

• Municipal Land Transfer Tax: Additional 0.5-2% (Toronto has both)

• First-time buyers may qualify for rebates if the property is their primary residence

• Combined taxes typically range from 1-4% of the purchase price

  
  

Example Land Transfer Tax Calculation (Toronto):

$1,000,000 property:

• Provincial LTT: ~$16,475

• Municipal LTT: ~$16,475

• Combined: ~$32,950

  
  

4. Additional Tax Considerations

Vacant Home Tax:

• Applicable to properties not used as a principal residence

• Up to 1% of the home's assessed value annually

• Triggered if the property is vacant for more than 6 months

• Created to combat supply issues and encourage property use

  
  

Rental Income Tax:

• Foreign property owners are subject to a 25% tax on gross rental income

• Can file Canadian taxes to claim deductions

• Must complete NR6 form to claim rental income as a non-resident

• Professional tax advice strongly recommended

  
  

Current Toronto Real Estate Market Conditions

1. Pricing Trends Across Property Types

The average sold price of all types of homes reached $1,101,691, marking a 5.2% drop from last year. Different property categories show varying trends.

Property Type Averages (2025):

• Detached Houses: $1.39 million average (down 6% year-over-year)

• Semi-Detached Homes: $1.09 million average

• Freehold Townhouses: $966,000 average

• Condo Apartments: $696,000 average (down 4.3% year-over-year, 13.4% from 2022 peak)

  
  

2. Market Dynamics and Buyer Opportunities

Buyer conditions in Toronto are different now compared to previous years. There is more inventory than before, giving buyers more choices and extra time to compare options.

Current Market Characteristics:

• Increased inventory levels favor buyers

• Sales volume is climbing approximately 8% between May and June 2025

• Condo market showing the highest supply levels

• Prices stabilizing or declining in most segments

• Negotiating power shifting toward buyers

• Multiple offer situations are less common than in previous years

  
  

3. Investment Hotspots and Emerging Areas

Foreign investors continue to buy in specific Toronto neighborhoods, showing strong fundamentals.

High-Demand Investment Areas:

• Leslieville and Riverdale: Strong for detached houses with renovation potential

• Downtown Near Universities: High rental demand from students

• Parts of Etobicoke: Good value with transit access

• The Junction: Multiplex opportunities with strong rental yields

• East York: Legal duplex and triplex opportunities

Financing Options for Foreign Investors

1. Down Payment Requirements

For non-U.S. or Canadian-based buyers, expect to pay at least 35% down on your property. This money cannot come as a gift from another person or entity. American-based buyers can pay as low as 20% in special cases.

Financing Structure:

• Minimum 35% down payment for most foreign buyers

• 20% possible for U.S. residents in certain circumstances

• No gifted funds accepted for down payment

• Source of funds documentation required

• Larger down payments improve approval odds

  
  

2. Mortgage Qualification Process

Once you have secured financing, foreigners have much the same options for mortgage products and interest rates as Canadian citizens, though you may be subject to premiums and extra restrictions.

Required Documentation:

• Valid passport and identification

• Proof of legal immigration status (if applicable)

• Employment verification and income documentation

• Credit history from the home country or an international credit report

• Bank statements and asset verification

• Letter from home country bank (sometimes required)

• Down payment source documentation

  
  

Mortgage Rate Environment (2025):

• Five-year fixed mortgage rates are advertised as low as 3.94%

• Variable rates available but subject to fluctuation

• Foreign buyer premiums may apply

• Mortgage insurance is not available for non-residents

• Interest-only options are sometimes available

  
  

3. Working With Canadian Lenders

Many lenders require a foreign buyer to sign mortgage paperwork in person, though this can be avoided with an executed Power of Attorney.

Lender Requirements:

• A Canadian bank account is typically required

• Multiple lenders to compare rates and terms

• Mortgage broker specializing in foreign buyers recommended

• Pre-approval before house hunting

• Closing timelines may be longer than for residents

The Purchase Process Step-by-Step

Phase 1: Pre-Purchase Preparation

Essential Pre-Purchase Steps:

1. Determine eligibility: Confirm you qualify under an exemption

2. Arrange financing: Secure pre-approval from a Canadian lender

3. Engage professionals: Retain a lawyer, a realtor, and a mortgage broker

4. Calculate total costs: Include all taxes, fees, and closing costs

5. Open Canadian bank account: Facilitate transactions and deposits

Phase 2: Property Search and Selection

Property Selection Factors:

• Location relative to transit, employment, and schools

• Property type matching investment goals

• Rental yield potential and cash flow projections

• Maintenance and condo fees, if applicable

• Property tax rates in specific neighborhoods

• Future development and infrastructure plans

  
  

Working with experienced realtors in Toronto who specialize in foreign buyer transactions becomes critical during property selection. Local market experts can identify properties with strong investment fundamentals, navigate bidding strategies, calculate true returns accounting for all taxes and fees, provide insight into neighborhood dynamics, and connect you with other essential professionals like lawyers and inspectors who understand non-resident transactions.

Phase 3: Making an Offer

Offer Process for Foreign Buyers:

• Present non-negotiable cheque or wire transfer into listing brokerage trust account

• Typical deposit: 5-10% of purchase price

• Include conditions for financing and home inspection

• Negotiate terms appropriate for foreign buyer (longer closing if needed)

• Deposit refunded if conditions are not satisfied

  
  

Signing Documents Remotely:

• Digital signing available for purchase agreements

• Video calls (Skype, FaceTime) for realtor consultations

• A Power of Attorney may be needed for mortgage signing

• Original POA documents must be couriered to the Canadian law firm

• Must be physically present or have a POA to close

  
  

Phase 4: Due Diligence

Critical Due Diligence Items:

• Home Inspection: By certified professional ($300+), identifies repair needs

• Status Certificate: For condos, reveals financial and legal details of the building

• Title Search: Lawyer verifies clear ownership and no liens

• Zoning Verification: Confirms intended use is permitted

• Insurance Quotes: Required before closing, can be expensive for non-residents

  
  

Phase 5: Closing the Transaction

Closing Process:

• Occurs 30-90 days after offer acceptance

• Final walk-through before closing

• All conditions satisfied and financing confirmed

• Taxes and fees paid through the lawyer's trust account

• Keys transferred after all funds cleared

• Ownership registered with the land registry

  
  

Closing Costs (2-4% of purchase price):

• Legal fees: $1,500-3,000

• Title insurance: $200-400

• Property inspection: $300-600

• Appraisal fee: $300-500

• Property survey (if required): $1,000-2,000

• Utility connection fees: Variable

• Home insurance: First-year premium

• Moving and immediate repairs: Variable

  
  

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Property Management and Ongoing Considerations

1. Managing From Abroad

Since foreign investors live in another country, they need a proxy to do everything on their behalf, making professional property management essential.

Property Management Services:

• Tenant screening and placement

• Rent collection and accounting

• Maintenance coordination and emergency repairs

• Property inspections and reporting

• Lease renewals and legal compliance

• Vacancy marketing

• Tax documentation preparation

  
  

Property Management Costs:

• Typically 8-12% of monthly rental income

• Additional fees for tenant placement

• Maintenance coordination fees

• Essential investment for absentee owners

  
  

2. Rental Income Optimization

Maximizing Rental Returns:

• Target tenant demographics (students, professionals, families)

• Furnishing options based on the target market

• Competitive pricing through market analysis

• Quality maintenance to attract reliable tenants

• Strategic upgrades to justify premium rents

• Understanding rent control regulations

  
  

Rental Yield Examples:

• Legal Duplexes (East York, Junction): After renovations ($85,000-120,000 per unit), combined rents $4,500-5,200 monthly, potential 10% net returns

• Multiplexes (Junction area): Triplexes/fourplexes priced $1.2-1.4 million, renovated rental income $8,000+ monthly, cap rates up to 5%

• Newer Condos: Steady cash flow, lower maintenance expenses

• Houses Near Universities: Premium rents from students, higher management requirements

  
  

Strategic Investment Considerations

1. Property Types for Foreign Investors

Foreign investors can find a range of choices in Toronto, from detached houses to condos and multiplexes, each offering different investment characteristics.

Detached Houses:

• Pros: Highest appreciation potential, land value component, renovation opportunities

• Cons: Highest purchase price, most maintenance, lower initial yields

• Best for: Long-term appreciation focus, renovation capability

  
  

Condo Apartments:

• Pros: Lower entry cost, minimal maintenance, strong rental demand, building amenities

• Cons: Condo fees, special assessments, rent control, supply increasing

• Best for: Hands-off investors, lower capital requirements

  
  

Multiplexes (Duplexes, Triplexes):

• Pros: Multiple income streams, economies of scale, value-add potential

• Cons: Higher purchase price, more complex management, renovation requirements

• Best for: Experienced investors, value-add strategy

  
  

2. Timing Your Investment

Current Market Advantages:

• Prices down from recent peaks, creating entry opportunities

• More inventory providing selection and negotiation power

• Lower competition from foreign buyers due to restrictions

• Interest rates are stabilizing after recent increases

• Rental demand remaining strong despite price adjustments

  
  

Risk Factors to Consider:

• Potential further price declines in the oversupplied condo market

• Interest rate volatility affecting carrying costs

• Regulatory changes (taxes, rent control, foreign buyer rules)

• Currency exchange rate fluctuations

• Economic recession possibility

  
  

Navigating Nearby Markets

1. Exploring Greater Toronto Area Opportunities

While Toronto proper offers the most liquidity and amenities, the surrounding areas provide different investment profiles worth considering.

Brampton Investment Profile:

• Average house prices around $574,026 (more affordable than Toronto)

• Strong student rental demand (multiple universities nearby)

• Growing tech sector presence

• Median days on market: 19 days

• Different municipal tax structure

• Proximity to Toronto employment centers

  
  

For investors comparing opportunities across the Greater Toronto Area and seeking to understand the nuanced differences between Toronto's premium pricing and more affordable nearby markets like Brampton, consulting with knowledgeable realtors in Brampton provides valuable insights into comparative investment potential, emerging neighborhoods with strong fundamentals, rental market dynamics in university-adjacent areas, and the trade-offs between location premium and cash flow optimization that help determine the optimal investment strategy for your specific goals and budget.

Other GTA Markets:

• Mississauga: More affordable, excellent transit, mature rental market

• Markham: Strong Asian community, tech employment, newer properties

• Vaughan: Newer developments, subway access, family demographics

• Hamilton: Most affordable, strong rental yields, industrial employment base

  
  

Legal and Tax Compliance

Working With Canadian Lawyers

A Canadian real estate lawyer is necessary for property purchases. They check title searches, review contracts, and help with taxes and legal paperwork.

Lawyer Responsibilities:

• Title search and insurance

• Contract review and negotiation support

• Closing document preparation

• Tax calculation and payment

• Mortgage registration

• Title transfer and registration

• Addressing any legal issues discovered

  
  

Selecting a Lawyer:

• Experience with foreign buyer transactions

• Licensed in Ontario (for Toronto purchases)

• Fluency in your language, if needed

• Clear fee structure provided upfront

• Availability for remote consultations

• Recommendations from your realtor or mortgage broker

  
  

Tax Filing Requirements

Even if you reside outside Canada, as a property owner, you may be required to file taxes in Canada regarding the property.

Tax Obligations:

• Rental income reporting (NR6 form for non-residents)

• Annual property tax payments

• Capital gains tax upon sale

• U.S. tax implications for American buyers

• Potential double taxation (check tax treaties)

• Professional accountant specializing in cross-border taxation recommended

  
  

Exit Strategy and Property Resale

Selling as a Non-Resident

There are tax implications for non-residents when selling a property, with forms, processes, and penalties for not complying with CRA rules.

Non-Resident Seller Requirements:

• Section 116 Certificate of Compliance from CRA

• Withholding tax on sale proceeds (buyer's obligation)

• Capital gains tax on appreciation

• Potential double taxation considerations

• Timeline: Start process 30 days before expected closing

  
  

Disposition Considerations:

• Market timing for optimal pricing

• Currency exchange timing

• Tax implications in both Canada and the home country

• Repatriation of funds

• Capital gains calculation accounting for all expenses

  
  

Pre-construction Investment hotspots in GTA

Frequently Asked Questions (FAQs)

Q. Can I still buy property in Toronto as a foreign investor despite the ban?

Yes, if you qualify under one of the exemptions. The ban has numerous exceptions, including temporary residents with work permits, international students, those purchasing properties with 4+ units, vacant land, commercial properties, or inherited properties. Tech workers with TN visas can now purchase one home. The ban primarily targets speculative residential purchases in major cities while allowing legitimate buyers who contribute to Canadian society or economy to still purchase property.

Q. How much extra will I pay in taxes as a foreign buyer in Toronto?

Foreign buyers face significantly higher costs than residents. The Non-Resident Speculation Tax (NRST) adds 25% to your purchase price in Ontario. If Toronto's proposed municipal speculation tax is approved, that's an additional 10%. Combined with land transfer taxes (2-4%), you could pay 37-39% above the purchase price in taxes alone. On a $1 million property, that's $370,000-390,000 in additional taxes beyond the purchase price.

Q. What down payment do I need to buy property in Toronto as a non-resident?

Non-U.S. or Canadian-based buyers typically need at least 35% down payment, and this money cannot be gifted. American buyers may qualify for 20% down in certain circumstances. The larger down payment requirement reflects higher risk from the lenders' perspective for non-resident borrowers. You'll need to prove the source of these funds, and they must come from legitimate, documented sources.

Q. Can I get a mortgage in Canada as a foreign investor?

Yes, though it's more challenging than for residents. You'll need at least 35% down payment, proof of income and employment from your home country, credit history documentation, valid identification, and likely a Canadian bank account. Interest rates and products are similar to what residents get, though you may face premiums. Working with mortgage brokers specializing in foreign buyers significantly improves your chances of approval.

Q. What happens if I gain permanent residency after purchasing as a foreign buyer?

Good news – if you acquire permanent resident status within four years of paying the Non-Resident Speculation Tax, you can apply for a government rebate of the NRST (the 25% tax). This represents substantial savings – on a $1 million property, you'd recover $250,000. This provision recognizes that many temporary residents transition to permanent status and shouldn't be penalized long-term for purchasing while on work or study permits.

Q. Should I buy in Toronto proper or the surrounding areas like Brampton?

This depends on your investment goals. Toronto offers the highest liquidity, strongest long-term appreciation potential, most diverse property options, and established rental markets, but comes with premium pricing and lower initial yields. Brampton and other GTA areas offer more affordable entry points, stronger cash flow potential, growing markets, and still-good Toronto proximity, but potentially slower appreciation and less liquidity. Many investors diversify across both for balanced portfolios.

Q. Do I need to be in Canada to complete the purchase?

Not necessarily. Many aspects can be handled remotely through video calls, digital document signing, and wire transfers. However, some lenders require in-person mortgage signing, or you can arrange a Power of Attorney (POA) to have someone sign on your behalf. The POA must be executed properly with original documents couriered to a Canadian law firm. You should visit to view properties if possible, though virtual tours are increasingly sophisticated.

Q. Can I rent out my Toronto property immediately after purchase?

Yes, foreign property owners are welcome to rent their properties in Canada. However, you'll face a 25% tax on gross rental income unless you file Canadian taxes to claim deductions. You'll need to complete an NR6 form to claim rental income as a non-resident. Professional property management is highly recommended for absentee foreign owners. Ensure you understand Ontario's landlord-tenant laws and rent control provisions before becoming a landlord.

Conclusion: Your Toronto Real Estate Investment Success Path

Learning how to buy property in Toronto as a foreign investor in 2025 requires navigating a complex regulatory environment, but the opportunities remain substantial for those who understand the rules and plan strategically. While the foreign buyer ban and additional taxes create barriers, numerous exemptions exist, and Toronto's fundamentals – world-class universities, diverse economy, immigration-driven population growth, and strong rental demand – continue supporting long-term real estate value.

The current market conditions actually favor well-prepared foreign investors. Prices are down from recent peaks, inventory is up, providing selection, and competition is reduced. The investors who succeed are those who qualify under exemptions, account for all taxes and fees in their financial planning, secure proper Canadian financing, work with experienced professionals who understand non-resident transactions, have realistic expectations about returns, and commit to long-term ownership rather than speculation.

Start by determining your eligibility under the exemption categories. Calculate your true all-in costs, including the 25-35% in additional taxes. Secure financing pre-approval from Canadian lenders experienced with foreign buyers. Build your professional team – realtor, lawyer, accountant, property manager – with cross-border expertise.

Toronto real estate has created wealth for foreign investors for decades, and despite current restrictions, it continues offering compelling opportunities for those who approach it correctly. The key is treating it as a long-term investment in one of North America's strongest markets rather than a short-term speculation.

Your Toronto property investment journey starts with understanding these regulations and working with professionals who can guide you through them successfully. The opportunity is real, the market is accessible, and the timing may be better than you think.