Prohibition on the Purchase of Residential Property by Non-Canadians Act
January 13, 2023 | Posted by: Harold Hagen
The Canadian housing market has undergone radical shifts in direction over the past several years, through dramatic peaks in major urban areas followed by a subsequent softening to the tune of -12% since November 2021.
In light of this real estate rollercoaster, the Federal Government has taken action to limit foreign investment in Canadian residential homes. The governments most recent effort was to implement the Prohibition on the Purchase of Residential Property by Non-Canadians Act (“The Act”). The Act went into effect on January 1, 2023 and limits non-Canadians from purchasing residential property in Canada for a period of two years.
A “non-Canadian” is a person who is not a Canadian citizen, a permanent resident of Canada or a person registered as an Indian under the Indian Act, or a permanent resident of Canada.
Here are the key points;
- The Act came into effect January 1, 2023. The Act, which will remain in force for two years, bans most non-Canadians from purchasing residential property in Canada while it is in force.
- A non-Canadian who purchases residential property while the Act is in force will be subject to penalties, which include a fine of up to $10,000 on conviction, and a forced sale of the property. Lawyers and real estate professionals who aid in the purchase of property in contravention of the Act are also subject to a fine of up to $10,000 on conviction
A Canadian permanent resident is a person who has been granted the legal right to live and work in Canada permanently. Permanent residents are not Canadian citizens but are issued a permanent resident card (PR card) which serves as proof of their status. They have most of the rights and privileges of Canadian citizens, but do not have the right to vote or run for political office.
Certain exceptions exist for “temporary residents” working in Canada and are allowed to purchase a home in Canada subject to meeting all of the following criteria:
- Hold a valid work permit or are authorized to work in Canada
- Have worked full time in Canada for at least 3 years within the last 4 years
- Have filed income tax returns for 3 of the last 4 taxation years
- Have not previously purchased a residential property in Canada while the Prohibition is in effect
If you are someone on a Work Visa, you now have to be in Canada with 3 years of taxes filed to CRA before you can buy a home in Canada. These people are also restricted to a maximum purchase price of $500,000.
The Canadian Government is planning to launch a website to further explain the new rules.
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