Foreign Buyer Ban on as of January 1, 2023

The Federal Government’s Prohibition on the Purchase of Residential Property by Non-Canadians Act will be in effect as of January 1, 2023.

Who Does it Prohibit

Foreign Individuals: The Act prohibits non-Canadians from buying for two years. So if an individual is not a Canadian citizen, is not a permanent resident or is not registered under the Indian Act they are prohibited from buying.

Foreign Corporations: The Act also prohibits the following foreign corporations from buying directly or indirectly.

• Corps based in Canada that are privately held,
• Corps not listed on a Canadian stock exchange,
• Corps that are controlled by someone who is a non-Canadian,
• Entities formed under Canadian or provincial laws controlled by a non-Canadian,
• Entities not formed under Canadian or provincial laws.

A non-Canadian or a foreign controlled corp. is defined as an entity in which a con-Canadian owns 3% or more or has 3% or more voting rights.

What is Prohibited

The law bars the purchase directly or indirectly of residential buildings with 3 units or less, as well as single family, a semi-detached or a condo unit The prohibition also applies to vacant land without a “habitable dwelling” zoned for residential or mixed use.
Indirect purchases include purchases made through partnerships, trusts or other entities seeking to avoid the prohibition.

Exemptions

• Acquiring an interest due to a divorce, separation, gift or death,
• A unit is rented to a tenant who will occupy the unit,
• The transfer results from a secured right by a secured creditor.

What also seem to be exempt from the ban are homes outside of areas that meet certain population thresholds based on census analysis. That may include some recreational properties but not all. Recreational properties in the Niagara Region are not exempt.

Additional Exemptions

• Besides refugees, students who have filed tax returns for the past 5 years and lived in Canada for most of the 5 years are limited to one purchase of $500,000 or less,
• Persons with a work permit, have worked in Canada for a minimum of 3 years within the 4 years preceding the purchase, filed tax returns for 3 of the 4 years, and have not purchased more than one residential property.
• An individual purchasing with a spouse or common-law partner who is not subject to the ban.

Penalties for Non-Compliance

Non-Canadians violating the prohibition, or any person or entity that knowingly helps, can be fined up to $10,000.

A Sales Agreement Signed in violation of the law will be valid and be required to close. Subsequently, the government would, by court order, require the property be sold. It can’t sell for more than what was paid as the buyer would not be allowed to profit from the sale.