Buying Real Estate in Canada as a Foreigner: What You Need to Know

Can Foreigners Buy Property in Canada?

Yes, it is possible to purchase real estate in Canada as a foreign buyer, although more recently this procedure has been restricted. In January 2023, the Canadian government came up with the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the foreign buyer ban).

This Act bans the majority of foreigners from purchasing residential homes in Canada within two years, and this was increased up to 2027. Nevertheless, there are some exceptions and circumstances under which foreigners still have the possibility to buy some properties.

Who Is Affected by the Foreign Buyer Ban?

The main target of the foreign buyer ban is non-residents and people working temporarily as foreign workers, who fail to meet specific requirements. This is how it breaks out:

The Ban Applies To:

• Non-Canadians who are not permanent residents
• Foreign companies or organisations not listed on a Canadian stock exchange

Exceptions Include:

• Permanent residents and Canadians
• Foreign students (with some exceptions)
• Legal temporary foreign workers
• Diplomats, refugee claimants, and those granted asylum
• Foreigners buying non-residential or recreational properties, e.g., cottages or vacation homes in the countryside

Where Can Foreigners Still Buy Property?

Although purchasing residential real estate is prohibited nationally, foreigners are still permitted to purchase some kinds of property:

• Office buildings, industrial units (i.e., commercial real estate)
• Unused land designed as commercial or industrial land
• The use of recreational property like cabins and cottages in the less-populated rural areas
• Some provinces or territories apply this law differently to properties

In more urban areas such as Toronto and Vancouver, the enforcement tends to be more stringent, whereas municipalities in the more rural areas can be a bit lenient.

Taxes and Additional Costs for Foreign Buyers

The additional taxes, which foreigners have to consider when purchasing real estate in Canada, especially in British Columbia and Ontario, include the following:

1. Non-Resident Speculation Tax (NRST)

• Ontario: The foreign buyers in select areas of Ontario get a 25 per cent tax imposed on the purchase price.
• British Columbia: British Columbia has placed a 20 per cent foreign buyers tax on residential homes in specified vicinities

2. Property Transfer Tax

A provincial tax on all property sales, the rates being provincial and dependent upon the price of the property

3. Annual Speculation and Vacancy Taxes

It is applied to foreign owners who do not reside in or lease their homes

Financing and Legal Considerations

Non-Canadians are generally able to obtain financing with Canadian banks, but, commonly, the down payment would be higher, e.g., 35 per cent or more of property value. Income, identity, and creditworthiness have to be proven, and the foreign currency exchange rates may also influence the overall cost.

It is necessary to hire a real estate lawyer to help you get around the local laws, prepare the necessary paperwork, and understand and abide by the federal and provincial regulations. Buyers ought to employ a realtor who has a license expert in foreign clients.

Final Thoughts

As a foreigner, you can still buy real estate in Canada, although this task has become even more complicated. There are government limitations, extra taxes, and eligibility criteria, and that is why it is necessary to perform adequate research and seek the assistance of experts before taking a step.

Whether buying a vacation home, a retirement home, or a long-term rental or investment, it is important to look at the rules to make an effective purchase and the right decisions.