What you need to know about the Canadian Foreign Homebuyer Ban 2023
What Is It?
As of Jan 1 2023 for a 2-year period, anyone who’s neither a Canadian citizen nor a permanent resident cannot purchase property in select areas.
Key Points
The Foreign Homebuyer Ban includes entities controlled by someone who is a non-Canadian, such as partnerships and trusts. It also includes any corporations incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada and which are controlled by someone who is non-Canadian. Plus, any entities formed otherwise than under the laws of Canada or a province.
Includes Anything “Residential”
- Detached house or similar building, containing not more than three dwelling units,
- Semi-detached house, rowhouse unit, residential condominium unit or similar premises.
- Land containing any habitable dwelling or vacant property that is zoned for residential or mixed use.
Exemptions for Properties and Transfers
- Properties with more than 3 units that are deemed “residential”, includes fourplexes.
- Any property NOT in the Census Metropolitan Area or Census Agglomeration (see green areas in map here:) https://www150.statcan.gc.ca/n1/pub/92-195-x/2021001/geo/cma-rmr/cma-rmr-eng.htm
- Acquisition by an individual of an interest or a real right resulting from death, divorce, separation or a gift.
- Rental of a dwelling unit to a tenant for the purpose of occupancy by tenant.
- The transfer under the terms of a trust that was created prior to coming into force of the Act.
- The transfer resulting from the exercise of a security interest or secured right by a secured creditor.
Penalties
- Fines up to $10,000.
- Court order sale of home purchased by a nonCanadian in violation of the act.
Exemptions for Individuals
- Students considered temporary residents, if all apply:
- Must be enrolled in an authorized designated learning
- Must be enrolled in an authorized designated learning institution.
- Must have filed tax returns for each of the 5 taxation periods prior to purchase and have been physically present in Canada for 244 days minimum for each of the 5 calendar years.
- Must have not previously purchased residential real estate.
- Can only purchase a property not exceeding $500,000.
- Temporary work permits, if all apply:
- Must hold valid work permit
- Must have worked full time for 3 out of 4 years before purchase and have filed tax returns for the 3 of 4 taxation years.
- Have not previously purchased residential real estate.
- Refugees and claimants of Refugee Protection act.
- Foreign Ministers with valid passport.
- Spouse or common law partners of Canadian citizens and residents.
Important Information to Know
- Anyone who knowingly assists a buyer with the purchase of residential real estate is liable under the act.
- If the contract is completed before January 1st 2023, but the transaction has not closed, it is still a valid transaction.
- Refinances are impacted only when the purpose of the funds are to purchase property.
- Fourplexes and recreational properties such as cottages and lake houses are exempt from the Foreign Homebuyer Ban.
- No clear indication yet on how the government will track and enforce this.
- Does not address international monies that flows in from other countries for Canadian residents to purchase.
- There is still area to purchase just outside of major city centres – any areas not deemed Census metropolitan areas.