[29 March 2023 Updates To Canada’s Foreign Homebuyer Ban And Underutilized Housing Tax link here]
Further to my Jan 4 post on Canada’s ban on foreign homebuyers we now have clarity on the specifics of this move by the Canadian govt. Here goes.
What is It?
As of Jan 1, 2023, for a period of 2 years, anyone who’s neither a Canadian citizen nor a permanent resident and non-Canadian company owners cannot purchase property in select areas.
Key Points
It 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.
Definition of “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
Penalties
- Fines up to $10,000.
- Court order sale of the home purchased by a non-Canadian in violation of the act.
Exemptions for Individuals
- Students considered temporary residents if all apply:
- 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 a 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 the Refugee Protection act.
- Foreign Ministers with a valid passport.
- Spouses or common-law partners of Canadian citizens and residents.
Exemptions for Property and Transfers:
- Properties with more than 3 units deemed “residential” include fourplexes.
- Any property NOT in the Census Metropolitan Area or Census Agglomeration (see green areas in the map here)
- 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 the 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
Important Information to Know:
- Anyone who knowingly assists a buyer with purchasing residential real estate is liable under the act.
- If the contract is completed before January 1st, but the transaction has not closed, it is still valid.
- Refinances are impacted only when the funds are to purchase a property.
- Fourplexes and recreational properties such as cottages are exempt.
- No clear indication yet of how the government will track and enforce this.
- It does not address international monies that flow in from other countries for Canadian residents to purchase.
- There is still an area to purchase outside major city centres – any areas not deemed Census metropolitan or agglomerate areas. See the map.
