Hart, 29, joined the Italians on a season-long loan in August after being replaced by Claudio Bravo at the Etihad.
The England international has admitted before that he is “surplus to requirements” at City, suggesting the ‘keeper’s future now lies in Italy.
Yet Torino have said they will not be able to meet the £15m valuation City are reportedly set to demand for the player this summer.
Speaking before Saturday's league meeting with Crotone, and quoted in La Gazzetta dello Sport, Serbian boss Mihajlovic said: "Hart wants to stay at Torino but we are all aware, both him and the club, that we can't buy him.
"At the most we could take him on loan for another year but that depends on both Manchester City and him.
"We will need to know if Hart is going to be here next year because if he's not then we'll need to change the way we play."
Earlier this week. City boss Pep Guardiola rebuffed a question about whether Hart could have his loan spell in Turin extended.
At a press conference, he said: "At the end of the season we are going to speak about the players who are under contract next year and about the loan players."