Buying in Toronto vs the US: costs and taxes

If you're a Canadian permanent resident, buying in Toronto is open to you. If you're here on a work permit, check the federal ban first, then brace for paying land transfer tax twice.

The short version

Canada's foreign buyer ban is set to run until January 1, 2027, and Budget 2026 proposes extending it to 2029 for existing homes [13]. It covers non-Canadians buying homes in cities like Toronto. Permanent residents and citizens aren't affected; work permit holders only qualify under set conditions [1].
Toronto buyers pay two transfer taxes: Ontario's land transfer tax and the city's own. On a CAD 1 million condo that's CAD 32,950 (about USD 23,550) in total [2][3].
Foreign nationals pay much more: a 25% Ontario Non-Resident Speculation Tax plus a 10% Toronto surcharge on top [2][3].
Canada's principal residence exemption doesn't cover US tax. The IRS taxes the gain above the Section 121 exclusion of USD 250,000 (USD 500,000 joint) [4].
A Canadian-dollar mortgage can create a US taxable currency gain when you pay it off, even if the house never makes money.

USD conversions use the Bank of Canada rate of November 5, 2026 (CAD 1.3989 per USD), rounded.

Can Americans buy in Toronto?

It depends on your status, not your passport.

Canadian citizens and permanent residents can buy freely. If you're a dual US–Canadian citizen or hold PR, the ban doesn't touch you.
Everyone else is a "non-Canadian" under the Prohibition on the Purchase of Residential Property by Non-Canadians Act. The ban covers houses with up to three units, semis, row houses and condos in census metropolitan areas and agglomerations, which takes in Toronto [1]. Breaking it can mean a fine of up to CAD 10,000 and a court-ordered sale [1].
Exceptions exist for some work permit holders, international students who meet strict tests, and refugee claimants and protected persons [1]. Summaries of the work permit test differ on the details, so get a real estate lawyer to confirm you qualify before you make an offer.

The ban was extended once already, from 2025 to January 1, 2027. In November 2026, Budget 2026 proposed extending it again, to January 1, 2029, for existing homes, while exempting new residential properties [13]. That still needs legislation and regulations, so check the status before you buy. Even if it lapses, Ontario's 25% speculation tax for foreign nationals stays in place unless the province changes it [2].

Getting a mortgage: Canadian bank or US lender?

Canadian mortgages work differently from the 30-year fixed you know:

Short terms. Rates are usually locked for a term of a few years and then renewed, so you face rate risk at every renewal.
A stress test. Federally regulated lenders qualify you at a rate above your contract rate.
Default insurance. Put down less than 20% and the loan needs mortgage default insurance, which adds a premium.
Newcomer programs. The big banks have programs for permanent residents and work permit holders without a Canadian credit history. Our guide to building Canadian credit explains how to get there faster.

The other route is borrowing in dollars against a US home. US lenders won't lend on a Toronto condo, though, and qualifying from abroad has its own quirks. Our guide to US mortgages for Americans living abroad covers them.

The US tax catch with a Canadian mortgage: the IRS measures the loan in dollars. If the loonie weakens while you owe it, paying off the balance gives you a currency gain that's taxable in the US, while a currency loss on a personal home loan isn't deductible. Our guide to currency gains on a foreign mortgage explains the math.

Costs side by side

Rates in force in November 2026. The Toronto column assumes a CAD 1,000,000 condo; Chicago is the US example.

	Toronto	Chicago
Can you buy?	Citizens and PRs yes; other non-Canadians banned until at least January 1, 2027 unless exempt; extension to 2029 proposed for existing homes [1][13]	Yes
Provincial / state transfer tax	Ontario LTT: 0.5% to 2.0% in bands, 2.5% over CAD 2 million; CAD 16,475 (about USD 11,780) on CAD 1 million [2]	Smaller Illinois and Cook County transfer taxes, usually paid by the seller
City transfer tax	Toronto MLTT mirrors Ontario's bands, with bands of 4.4% to 8.6% on the portion over CAD 3 million from April 1, 2026; another CAD 16,475 on CAD 1 million [3]	Chicago: USD 3.75 per USD 500 paid by the buyer and USD 1.50 by the seller [5]
Foreign national surcharge	Ontario NRST 25% plus Toronto MNRST 10% [2][3]	None
Lawyer and title	A real estate lawyer handles closing; title insurance is common	Real estate attorneys commonly handle Illinois closings, plus title insurance
Annual property tax	City of Toronto tax on the MPAC assessed value	Cook County property tax
Tax on selling your home	Exempt under the principal residence exemption if designated every year [6]	Federal capital gains tax after Section 121 [4]

On a USD 700,000 Chicago condo, the city's buyer share comes to USD 5,250 [5]. On a CAD 1 million Toronto condo, the two land transfer taxes add up to CAD 32,950, about USD 23,550. First-time buyers in Ontario and Toronto can get refunds of part of the tax; the rules and caps are on the provincial and city pages. A foreign national buying the same condo would owe another CAD 350,000 (about USD 250,200) in NRST and MNRST.

Tax when you sell

The Canadian side

If the home was your principal residence for every year you owned it, the gain is generally tax-free in Canada. You must report the sale and the designation on Schedule 3 and Form T2091(IND), or you risk losing the exemption [6]. Only one home per family can be designated each year, and if you sell within 365 days the gain is usually treated as business income, unless a life event like a job relocation applies [6].

Leave Canada first and sell later, and you're a non-resident seller. The buyer must withhold up to 50% of the price unless you get a section 116 certificate from the CRA, which usually means paying 25% of the expected gain up front [7]. You then file to get any excess back.

The US side

Uncle Sam taxes your worldwide gain, in dollars:

Section 121. If you owned and lived in the home for 24 of the 60 months before selling, up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded [4]. The rules don't require the home to be in the US. Toronto gains above that are taxable in the US, even if Canada exempts them fully.
Foreign tax credit. Canadian income tax on a gain can be credited on Form 1116 [8]. But if Canada charged nothing, there's no credit to use.
Exchange rates. Your dollar cost uses the rate when you bought and your dollar price the rate when you sold.

The house back in Chicago

If you rent out your Chicago home while you're in Toronto, you generally lose Section 121 once you've been gone more than three years, and depreciation after May 6, 1997, is taxed on sale either way [9]. Canada will tax that rent too while you live there, with relief for US tax under the treaty. Our guide to selling your US home after moving abroad covers the timing.

Renting it out

In Canada, while you live there. Rent is taxed as ordinary income with deductions for expenses.
After you move away. The tenant or your agent must withhold 25% of the gross rent. With an approved Form NR6, the 25% applies to net rent instead, and a section 216 return lets you pay tax on the net amount [10].
On your US return. Report the rent on Schedule E. A home used predominantly outside the United States must be depreciated under the Alternative Depreciation System over 30 years, not the 27.5 years used for a Chicago rental [11][12]. Canadian tax on the rent can be credited on Form 1116.

For the reverse case, a Chicago house rented out while you live in Toronto, see our guide to rental income from a US property.

Which makes sense for whom

PR holders staying long term. Buying in Toronto can work, especially if your expected gain sits under the Section 121 limit. Watch the currency gain on a Canadian mortgage.
Retiring in Canada. Similar logic, plus estate planning in two countries.
On a work permit, moving back in a few years. Renting is usually the better call. You may not be allowed to buy, a foreign national pays 35% in extra Toronto taxes, and short holds don't earn back two land transfer taxes.
Keeping a US home. Fine as a landing pad, but track the three-year Section 121 window.

A US expat tax preparer (or a Canadian cross-border accountant or lawyer) can check your situation. Other Americans' experiences are a click away in our community group for Americans in Canada.

Buying in Toronto vs back home: two land transfer taxes and the IRS