Canada's picturesque skylines, cultural mosaic, and resilient economy have made it a magnet for global property hunters. Whether it's a chic downtown condo in Toronto or a lakeside chalet in British Columbia, the allure is undeniable. But the question lingers—can foreigners actually buy real estate in Canada?
Current Law: Foreign Ownership Restriction
Since January 1, 2023, Canada has enforced the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Initially set for two years, it's now extended to January 1, 2027. This move targets housing affordability by cooling speculative demand in hot markets.
Who is Classified as a Non-Canadian?
A ‘non-Canadian’ includes:
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Individuals who are not citizens or permanent residents.
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Entities not incorporated under Canadian laws or controlled by non-Canadians.
If a corporation’s ownership is majority foreign, even if it's based in Canada, it may be restricted.
What Properties Are Affected?
The law applies to residential properties in Census Metropolitan Areas and Census Agglomerations. These usually include:
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Single-family homes
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Semi-detached houses
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Townhomes
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Condo units
Excluded from the ban are:
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Larger buildings with four or more units
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Recreational properties like cottages
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Properties in rural or low-population areas
Who is Exempt from the Ban?
Certain categories are still allowed to purchase:
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International students meeting specific study duration and tax filing conditions
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Temporary foreign workers who’ve filed taxes in Canada
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Refugees and protected persons
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Diplomats and members of international organizations
Taxes: The Inevitable Financial Bite
Foreigners allowed to buy are often subject to additional taxes:
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Non-Resident Speculation Tax (NRST): Applies in Ontario and B.C., ranging from 20–25%.
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Vacancy Tax: Cities like Vancouver and Toronto levy taxes on underused residential properties.
Mortgage and Financing Considerations
Canadian banks do offer mortgages to foreign buyers, but with strings attached:
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A typical down payment ranges between 35–50%.
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Proof of income and international credit checks are standard.
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Interest rates may be slightly higher for non-residents.
Required Documents for Purchase
Buyers generally need:
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Valid passport and visa (if applicable)
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Canadian bank account
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Proof of employment or source of funds
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A Canadian lawyer to oversee the transaction
Due Diligence is Crucial
Foreign buyers should:
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Work with a real estate agent who understands cross-border transactions
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Order a home inspection before closing
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Understand provincial rules, which may differ significantly
Can You Buy Property Without Living in Canada?
Yes. Residency is not a requirement. But ownership does not guarantee immigration status or the right to live in Canada. Foreign buyers should be aware that rental income is taxable and ownership is not a pathway to permanent residency.
Can Foreigners Own Land in Canada?
Yes, including freehold land. However, in some provinces like Prince Edward Island, there are limits on how much land a non-resident can own. Always check provincial laws.
Ownership Through Corporations or Trusts
Some buyers use Canadian corporations or family trusts to purchase property. While legal, these structures must comply with anti-avoidance rules and are now under increased scrutiny due to beneficial ownership regulations.
Can You Inherit Property in Canada?
Absolutely. Inheriting real estate as a non-resident is allowed. However, taxes and the foreign buyer ban still apply if you intend to purchase additional property.
Renting Out the Property
Foreign owners can rent out their property, but they’ll need to file Canadian tax returns and potentially pay withholding taxes on rental income.
Annual Reporting Obligations
Non-resident owners must:
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File the NR4 form with the CRA
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Designate a Canadian agent for tax purposes
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Possibly submit a Section 216 return for rental income
Legal Support Is Non-Negotiable
Buying property across borders involves nuanced legalities. Retaining a real estate lawyer ensures compliance and peace of mind.
Recreational Properties: A Loophole?
Properties in remote areas or those used for seasonal purposes often remain outside the purview of the federal ban. These make appealing targets for savvy foreign investors.
Thinking Beyond Ownership
If you’re genuinely passionate about real estate, you might even consider going pro. You can explore how to become a real estate agent and unlock insider opportunities—check this article for a step-by-step guide.
Future Prospects for Foreign Buyers
Regulations may shift based on political winds and housing affordability metrics. Keeping a finger on the policy pulse is vital for long-term investors.
Final Thoughts
Foreigners can buy real estate in Canada, but not without hurdles. Restrictions, taxes, and financing constraints exist, but with proper planning and legal guidance, doors remain open—especially outside metropolitan zones and in non-residential segments. A thoughtful approach is the key to planting your stake in the Great White North.
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