Ontario’s Non-Resident Speculation Tax (NRST) is a 25% tax on the purchase of residential property by foreign nationals (non-Canadian, non-PR buyers) anywhere in the province. It’s often called Ontario’s foreign buyer tax. Normally, if any buyer of a home is a foreign national, the entire property price is taxed at 25% – even if the other co-buyers are Canadian. For example, a foreign person buying with a Canadian spouse would face the full tax on the whole purchase price unless an exemption applies.
The NRST spousal exemption is that key exemption. It allows certain mixed-nationality couples to avoid paying the 25% NRST at closing. Essentially, if you are purchasing Ontario real estate with a foreign spouse (or you are the foreign spouse) and your partner is a Canadian citizen or permanent resident, you won’t have to pay this hefty tax – provided you meet all the conditions. This exemption recognizes that many families include both Canadians and foreigners, and it spares them from the foreign buyer tax when making a home their primary residence.
Why does this matter? The dollars at stake are huge. On a $800,000 home, a 25% NRST would be $200,000 in extra tax. The spousal exemption can save eligible couples that entire amount. It’s designed to help families where one spouse is rooted in Canada to buy a home without a massive penalty. Next, we’ll break down exactly who qualifies and what you need to do to claim this exemption.
Who Qualifies for the NRST Spousal Exemption?
To use the NRST spousal exemption in 2025, all of the following must be true:
- One spouse is a foreign national, and the other spouse is eligible. The foreign buyer must be legally married to or in a common-law partnership with a spouse who is one of the following: a Canadian citizen, a permanent resident of Canada, a nominee under Ontario’s provincial nominee program, or a protected person (refugee). In short, the spouse not subject to NRST needs to have a status in Canada that is exempt (citizen/PR) or an approved special status (OINP nominee or refugee).
- “Spouse” includes married or common-law partners. You do not have to be officially married, as Ontario recognizes common-law spouses for land transfer and NRST purposes.
- Both spouses are on title as joint purchasers. The property must be purchased together, with each spouse listed as a transferee on the deed. If the foreign partner tries to buy the home alone (even if married), the exemption won’t apply – it’s only for joint purchases with a qualifying spouse. Make sure all paperwork lists both of you as buyers.
- No other foreign buyers in the deal. The spousal exemption fails if there is any additional foreign purchaser on title besides the one spouse. For example, suppose a Canadian citizen and their foreign spouse buy a property with a third buyer who is also a foreign national – in that case, the presence of that third foreign buyer means no exemption, and NRST would be charged. All other co-purchasers (if any) should be Canadian citizens, permanent residents, or otherwise exempt individuals. Essentially, the only foreign person involved should be the one who is married to an eligible spouse.
- Intent to occupy as a principal residence. The couple must certify that they will live in the home as their principal residence, typically within 60 days of closing. This is a key condition for all NRST exemptions. The spousal exemption is meant for end-users making a home, not investors. During the closing process, you’ll sign a statement (or affidavit) confirming you intend to move in and use the property as your primary home. Failing to actually move in could jeopardize the exemption.
How to Claim the Spousal Exemption (Timing and Process)
Claiming the NRST spousal exemption is done at the time of closing – you want to get the exemption upfront so that the tax is never charged. Here’s how the process typically works:
- Inform your real estate lawyer early. When you start the home-buying process, let your lawyer (or conveyancer) know that one spouse is a non-resident and the other is a Canadian/PR, and that you plan to use the NRST spousal exemption. They will ask for proof of the Canadian spouse’s status (e.g. passport or PR card) and confirm your marital/common-law status (marriage certificate or a declaration for common-law).
- Documentation and statutory declaration. Your lawyer will prepare a statement for you to sign, certifying that you meet the exemption criteria – namely, that you are spouses, you’re eligible (citizen/PR spouse, etc.), and you will occupy the property as a principal residence. All transferees (buyers on title) usually must sign to confirm these facts. This declaration is part of the land transfer closing papers.
- No NRST paid at registration. If everything is in order, the transaction closes without NRST being added. Normally, NRST (25% of the purchase price) would be due upon registration of the deed, together with the regular land transfer tax. In an exempt transaction, your lawyer claims the exemption on the land transfer tax affidavit, and the 25% tax is not charged at all. Essentially, you skip paying it rather than paying and getting a refund later.
- After closing – compliance checks. The Ministry of Finance may audit or request proof later to ensure the exemption was properly claimed. This could include confirming that you indeed lived in the home as stated. Make sure you actually fulfill the promise to occupy the property, and keep records (such as address changes, utility bills in your name, etc.) in case you need to demonstrate your residency. If an audit finds the exemption was claimed without meeting the conditions, the tax (plus penalties/interest) could be clawed back.
Toronto’s New MNRST: Spousal Exemption Applies There Too
Beginning January 1, 2025, home purchases in the City of Toronto by foreign buyers incur an additional 10% Municipal Non-Resident Speculation Tax (MNRST) on top of the provincial NRST. In Toronto, a foreign purchaser would be looking at 35% total tax on a home (25% NRST + 10% MNRST) – a staggering amount. The good news is that Toronto’s MNRST has the same spousal exemption rules as the provincial NRST.
What does this mean? If you qualify for the NRST spousal exemption, you automatically qualify to be exempt from the Toronto MNRST as well. Toronto explicitly adopted the provincial criteria for exemptions. For example, a foreign national buying a house in Toronto jointly with their Canadian citizen spouse will pay neither the 25% NRST nor the 10% city tax. You’ll just pay the usual Ontario land transfer tax and Toronto’s regular land transfer tax, but no foreign buyer taxes.
If you are buying in Toronto, be sure your lawyer claims both the provincial and municipal exemptions. The process at closing will involve declaring exemption for NRST and similarly for the MNRST on the municipal land transfer tax affidavit.
NRST Rebate for Permanent Residents vs. Spousal Exemption
It’s easy to confuse the NRST spousal exemption with the NRST rebate for new permanent residents, but they are two different relief measures:
- Spousal Exemption – Upfront: This is what we’ve been discussing. It completely waives the NRST at the time of purchase if you qualify, so you never pay the tax at closing. The spousal exemption is based on your status at the time of purchase (having a Canadian/PR spouse and meeting the conditions). No money is paid to the government, so no refund is needed later.
- NRST Rebate – After the Fact: If a foreign buyer cannot claim any exemption at purchase, they might still get their NRST money back later via a rebate. The most common rebate is for those who become permanent residents after buying. For example, Ontario will rebate the 25% NRST if the foreign national (or their spouse) becomes a Canadian permanent resident within 4 years of the purchase date. To get this rebate, the buyer must have paid the NRST and then apply to the Ontario Ministry of Finance once they achieve PR status. There are conditions: the property must be owned only by the buyer and/or their spouse and must have been used as their principal residence the entire time before the rebate. In short, you needed to actually live in the home and not add other owners. You also must apply within a strict deadline (currently 90 days after obtaining PR status) with all supporting documents.
Common Mistakes to Avoid
Even with a clear understanding of the NRST spousal exemption, buyers can slip up. Here are some common mistakes and misconceptions to avoid:
- Not putting the Canadian spouse on title.
- This is a big one. To get the exemption, the Canadian/PR spouse must be a purchaser on title. Sometimes people leave a spouse off title for mortgage qualification or other reasons; doing so will backfire here. Solution: Make sure both spouses are listed as owners at closing, even if one spouse is contributing less financially.
- Assuming a “spouse” includes everyone you live with.
- The definition of spouse is specific. Simply being engaged or living together for a short time doesn’t count. You must either be legally married or meet the common-law criteria.
- Closing before the spouse’s status is confirmed.
- Timing issues can cost you. If your Canadian partner’s citizenship or permanent residence is in process but not finalized by closing, they won’t count as a Canadian for the exemption. Similarly, if you’re the one becoming a PR, you need that status before closing day to be exempt (otherwise, you’d seek a rebate later). Plan your closing date wisely.
- Including an extra foreign buyer in the purchase.
- Perhaps you and your Canadian spouse decide to buy a house together with a foreign family member or friend to help with the down payment. Remember: adding any additional foreign buyer kills the spousal exemption.
- Failing to occupy the property as promised.
- If you claim you will use the home as a principal residence and then, for example, immediately rent it out or leave it empty, you are violating the terms of the exemption.
A Path to Homeownership Without the Tax Burden
The NRST spousal exemption in Ontario is a game-changer for many couples in 2025. It means that having a foreign spouse doesn’t have to translate into a hefty “foreign buyer” tax on your dream home. By understanding the requirements and planning properly, you can buy a home together in Ontario without paying the 25% NRST, and 10% MNRST.
Isabel Caguioa is a Toronto tax lawyer at Taxpayer Law who specializes in Non-Resident Speculation Tax (NRST) refund applications. Reach out today to learn how Isabel can help you.
