2 Years Foreign Buyers Ban On Buying Canadian Residential Real Estate.
Saturday Dec 10th, 2022
As we are nearing the end of 2022 we will be faced with new regulations coming to life as of January 1, 2023, one of them is a temporary 2 year foreign buyer ban. The temporary ban is introduced with the intent of making housing more affordable for Canadian residents.
Any contractual obligations arising from the contracts signed prior to January 1, 2023 will not be subject to the ban.
Who will be prohibited from making residential real estate purchases?
In short all Non-Canadians. Non-Canadians are defined as:
- Individuals who are neither Canadian citizens, nor who are not permanent residents and who are not registered as Indian under Indian act.
- A corporation that is not incorporated under the laws of Canada or a province (corporations incorporated outside of Canada)
- 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 is controlled by Non-Canadians (corporations incorporated in Canada but controlled by non citizens and non residents).
- The prohibition extends to trusts or any other entities controlled by Non-Canadians.
What types of real estate properties are banned.
Any residential property containing not more than three residential dwellings, this includes detached, semi, linked, townhomes, and condominiums. A residential dwelling is defined as containing private kitchen, a private bath and private living area.
As with every rule there are exemptions, in this case the exempt Non-Canadians are:
- Temporary residents within the meaning of the Immigration and Refugee Protection Act who satisfy the prescribed person conditions (refugees)
- International students on the path to permanent residency.
- Individuals with work permits residing in Canada.
- Accredited members of foreign missions in Canada.
- A Non-Canadian purchasing residential property with a spouse or common-law partner who is a Canadian citizen, permanent resident, registered Indian under the Indian act, temporary resident under the Immigration and Refugee Act or protected person.
In addition, the government intends to exclude recreational properties from the prohibition, this would exclude any residential property located outside of the Census Metropolitan Area or Census Agglomeration.
Penalties and fines.
As with every rule and regulation, typically come along fines as a deterrent.
The property found to have been purchased by a banned individual or entity may be forced to be sold, and if sold for higher price than purchased the Non-Canadian will not receive more than the purchase price paid.
Fine of up to $10,000 imposed to any individual or entity who purchased the property and for any individual or entity knowingly assisting with the purchase of the residential real estate. This will typically include, but is not limited to, directors, officers or managers of the corporations, real estate lawyers and agents, developers, assignors and assignees.
For legal advice please contact your real estate lawyer, this blog is not intended to be a legal advice and is for information purposes only.
Source: Canada Consolidated Statues.