The foreign buyer ban is a new law in Canada on January 1, 2023. It prohibits non-Canadians and non-permanent residents from purchasing residential properties in the country in 2023 and 2024.
Who does the Prohibition on the Purchase of Residential Property by Non-Canadians Act apply to?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act applies to anyone who is neither a Canadian citizen nor a person under the Indian Act nor a permanent resident. Certain exceptions for specific groups of non-Canadians are outlined in the Regulations. The corporations and entities formed under the laws of Canada or a province, not listed on a stock exchange and controlled (10% foreign control threshold) by someone who is non-Canadian.
There are some situations where this doesn’t apply, including:
· when a non-Canadian acquires an interest in a residential property because of a divorce, separation, gift, or death
· when a non-Canadian rents a dwelling unit for the purpose of occupying the dwelling unit – in other words, a non-Canadian who is renting and occupying the dwelling unit does not constitute a purchase
· when a creditor exercises a security interest or secured right, such as the seizure and foreclosure of a residential property, or
· when a non-Canadian purchases residential property for the purposes of development and vacant land zoned for residential and mixed use.
Who can purchase property?
· A Canadian Citizen
· A person under the Indian Act
· A permanent resident
· Non-Canadian spouses and common-law partners purchase residential property in Canadian with their spouse or common-law partners who is a Canadian Citizen, permanent resident, person registered under the Indian Act and refugee.
· Temporary residents studying in Canada, if
They are enrolled in a program of authorized study at a designated learning institution as defined in the Immigration and Refugee Protection Regulations, and
have filed income tax returns for each of the 5 taxation years preceding the year in which the purchase was made, and
have been physically present in Canada for a minimum of 244 days in each of the 5 calendar years preceding the year in which the purchase was made, and
have not previously purchased a residential property in Canada while the prohibition is in effect, and
purchase a property for a price not exceeding $500,000
· Temporary residents working in Canada, if
They hold a valid work permit or are authorized to work in Canada, and
have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and
have not previously purchased a residential property in Canada while the prohibition is in effect
What happens if a non-Canadian violates this Act?
Put simply, the Act makes it a crime to violate the prohibition. The Act imposes a fine for people who violate the prohibition. Non-Canadians that violate the prohibition, or any person or entity that knowingly assists, can be fined up to $10,000.
If a non-Canadian is convicted of violating the prohibition, a court can order the sale of the residential property. Any court-ordered sale will result in the non-Canadian receiving no more than the price paid to purchase the residential property.
The Act also establishes that, if a corporation or entity commits an offence, officers, directors, senior officials and other representatives of the corporation or entity can be a party to and liable for the offence.
Reference:
Prohibition on the Purchase of Residential Property by Non-Canadians Act – Frequently asked questions | CMHC (cmhc-schl.gc.ca)