What the Foreign Buyers Ban Means For You
On January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Foreign Buyers Ban”) came into effect in Canada and will be in place for two years.
As a company, Sotheby’s International Realty Canada expects that we will see continued interest and demand for Canadian real estate from purchasers from abroad who will remain fully qualified to purchase a home in Canada.
WHO DOES THE BAN TARGET?
The legislation targets non-Canadian citizens, as well as non-Canadian commercial entities, i.e., those formed not pursuant to the laws of Canada or one of its provinces, or an entity formed under Canadian or provincial laws with direct or indirect ownership by a non-Canadian, where that ownership amounts to 3% or more of the value of the entity’s equity or voting rights.
However, there are several exemptions subject to varying and complex conditions.
WHO IS EXEMPT FROM THE BAN?
The ban does NOT apply to:
Canadian citizens or permanent residents.
The spouse or common-law partner of a Canadian citizen, permanent resident, person registered under the Indian Act, or refugee.
Non-Canadians who are looking to rent a residential property in Canada.
Temporary residents enrolled in a program of authorized study at a designated learning institution (as defined in Immigration and Refugee Protection Regulations), who meet the eligibility criteria.
Temporary residents with a valid work permit or authorization to work in Canada, who meet the eligibility criteria.
Refugees, temporary residents who are proven to be fleeing conflict, and those making a claim for refugee protection.
Accredited members of foreign missions in Canada.
Important: these exemptions are subject to varying and complex conditions. Non-Canadian clients who may be exempt, must be referred to an appropriate third-party professional (e.g. a lawyer or accountant) to determine their eligibility.
WHAT PROPERTY TYPES ARE INCLUDED IN THE BAN?
The legislation applies to residential properties, including detached homes or similar buildings, as well as semi-detached houses, rowhouse units, residential condominium units and other similar premises, that are located in a census metropolitan area or a census agglomeration. A census metropolitan area has a total population of at least 100,000 people, with at least 50,000 living in its core, and a census agglomeration has a core population of at least 10,000 people.
This means that the Foreign Buyers Ban does not apply to non-Canadians buying a residential property outside of a census metropolitan area or census agglomeration.
WHAT PROPERTY TRANSACTION TYPES ARE AFFECTED BY THE BAN?
The regulations apply to purchases, defined as a direct or indirect acquisition of a right or interest in residential property.
It does not apply to property acquisitions as a result of death, divorce, gifts, or a separation.
WHAT ARE THE PENALTIES FOR VIOLATING THE FOREIGN BUYERS BAN?
There are significant penalties for violating this legislation. Any person knowingly assisting or attempting to assist a non-Canadian in the purchase of a prohibited property may be subject to a summary conviction offence under the Criminal Code and a fine of up to $10,000.
In a constantly evolving market, let us help you make informed decisions. We offer personalized attention tailored to your needs, regardless of the neighbourhood or price of your home. Ask us about local market conditions and opportunities, and let us prepare you for your next move.
This article was originally published in Sotheby’s International Realty’s Insight Art of Living blog in January 2023. For the most up-to-date and accurate information, and to determine your eligibility, we encourage clients to contact us or an appropriate third-party professional such as a lawyer or accountant.
