Non-Canadians Can No Longer Purchase a Home in Canada
As of January 1, 2023, non-Canadians can no longer buy a residential property for a period of 4 years up to January 1, 2027. The Government of Canada passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act in its 2022 budget in June. Here are 7 facts about this new law.
Who is affected?
Most foreigners (non-Canadians) will no longer be able to buy a house in Canada for a period of 4 years starting January 1, 2023. There are exemptions however. First, a non-Canadian will be able to purchase a residential property with their spouse or common-law partner, so as long as the latter is eligible to purchase residential property in Canada. Also, a temporary resident enrolled in an authorized study program will be able to buy a property in the country, provided that the purchase price does not exceed $500,000.
Are there exceptions?
Non-Canadians can purchase residential properties located outside of Census Metropolitan Areas (CMA) and Census Agglomerations (CA). The Act applies to non-Canadians for non-recreational residential properties in Canada unless this purchase is confirmed to be for future employment or immigration in the next two years.
What types of property are covered by the law?
It applies to residential properties such as single-family homes, condominiums, semi-detached houses, buildings of up to three dwelling units, as well as parts of buildings like a semi-detached house, condominium unit or other similar premises. This law does not hinder non-Canadians from renting accommodation in Canada.
Why was this law put in place?
Through this initiative, the Canadian government wishes to give a boost to the real estate market and to Canadians. In fact, this measure is intended first to temporarily limit foreign buyers in order to give priority to Canadian buyers. This could therefore help to slow the increase in house prices and thus facilitate housing affordability for Canadians.
What is the scope of the law?
The Act’s prohibition also extends to indirect purchases of residential properties such as those made through corporations, trusts or other legal entities.
Are there other similar laws?
As of January 1, 2022, non-Canadian and non-resident owners are also subject to the 1% annual Underused Housing Tax for their vacant or underused residential properties. This tax also affects certain Canadian owners in specific situations.
What happens if the Prohibition on the Purchase of Residential Property by Non-Canadians Act is not respected?
The Act provides for a fineof up to $10,000 for any non-Canadian who contravenes the Act, or for any person (or entity) who deliberately induces, aids, or abets or attempts to counsel a non-Canadian to contravene it.
See also:
13 expenses to budget for when buying a home
Pre-Purchase Inspections: What You Should Know
Preparing for Your First Meeting With a Real Estate Broker