The Federal government’s new legislation banning foreign buyers from directly or indirectly purchasing property in Canada for a period of 2 years came into effect on January 1, 2023.
Who is a Foreign Buyer or Non-Canadian for the the purpose of this legislation?
The act defines a non-Canadian as:
- An individual who is neither a Canadian citizen nor a person registered as an Indian under the Indian Act nor a permanent resident;
- The Act restricts non-Canadians from avoiding the ban by using corporations or other entities to purchase residential property.
- A corporation that is incorporated otherwise than under the laws of Canada or a province.
- An entity formed under Canada’s laws that has direct or indirect ownership by a non-Canadian of 3 per cent or more of the value of the entity’s equity or voting rights.
- A corporation incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada for which a designation under section 262 of the Income Tax Act is in effect and that is controlled by a person referred to in paragraph (a) or (b); and
- A prescribed person or entity.
Persons exempted from ban include:
- International students.
- Temporary residents.
- Specifically exempted foreign nationals.
- Refugee claimants, subject to varying conditions, such as tax filing and residency obligations.
- Common-law partner if the spouse or common law-partner is a Canadian citizen, person registered as an Indian under the Indian Act, permanent resident or persons referred to in the above.
What types of property does the ban apply to?
The ban applies to “residential property,” which includes:
- Detached houses or similar buildings of one to three dwelling units.
- Semi-detached houses, strata units or other similar premises.
- The definition further includes “land that does not contain any habitable dwelling, that is zoned for residential use or mixed use, and that is located within a census agglomeration or a census metropolitan area, is a prescribed real property or immovable.”
The ban doesn’t apply if the agreement of purchase and sale of the residential property involving a non-Canadian is dated before January 1, 2023.
If you are unsure about whether this ban applies to you or not seek legal advice before you buy.