The New Foreign Buyers' Plan
Tags: Homes In Toronto, Foreign Buyer Ban, Real Estate In Canada
Canada’s 2-year ban on foreign buyers started January 1 – here’s what you need to know.
To help address our severe housing supply shortage, the Canadian government has banned anyone who isn’t a Canadian citizen or a resident from buying residential property here. The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into effect January 1, 2023 and will be in effect until 2025.
The ban includes all residential properties in municipalities with populations of 10,000+ people, including houses, condos and vacant land zoned for residential or mixed use. Recreational properties like cottages and properties in towns with fewer than 10,000 residents do not fall under the ban. The law also doesn’t prevent foreign buyers from purchasing larger buildings with multiple units.
Why ban non-Canadians from owning property here?
The goal of the ban is to make homes more affordable for Canadians, with the idea that reducing competition from buyers from outside of the country will decrease demand and open up new opportunities for local buyers who had previously been pushed out of the market.
Will the ban actually be effective in making housing more accessible? Critics point to the fact that foreign buyers actually own a very small percentage of homes in Canada, and that they are being scapegoated as the problem while speculation by Canadian investors goes unchecked.
On the other hand, foreign buyers with deeper pockets may have a hand in driving prices out of the reach of Canadians. Removing them from the mix could make a difference to affordability. Only time will tell if it will make a difference.
Are there exemptions to the ban?
Yes. Refugees, some international students and people who are living in Canada on temporary work permits can still buy property. So can non-Canadians who have a spouse or common-law partner who’s a citizen or permanent resident.
So what would happen to a foreign buyer if they bought something here anyway?
They would be fined up to $10,000, and would probably have to sell the property they had bought. But it’s not just buyers who would get into hot water – whoever helped them with their purchase (real estate agents, lawyers) could also face fines. However, it is possible that for particularly large purchases, a $10,000 fine may not pose enough of a deterrent to keep determined buyers away.
A couple of other facts about buying property in Canada for non-residents:
- Buying property here won’t help you get citizenship. You have to go through regular channels and qualify under Canadian immigration laws to get in.
- Rental income is subject to income tax. Non-residents who purchased property here before January 1, 2023 aren’t impacted by the ban. But those who have investment properties they are renting out should know that any rental income is subject to Canadian tax. So even if you’re a non-resident, if you earn rental income, you must file an income tax return in Canada.
Got questions about this or any other real estate issue? Reach out anytime, I’m always happy to talk!