The federal government has extended the ban on foreign nationals purchasing homes in Canada for an additional two years, until January 01, 2027. Finance Minister Chrystia Freeland delivered this news, emphasizing ongoing concerns about housing affordability nationwide.
Background
The Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”) came into force on January 01, 2023. Under the Act, non-Canadians are prohibited from directly or indirectly purchasing residential real estate in Canada aiming to address growing concerns about housing affordability.
Key Points
- Extension Details: The ban, originally set to expire on January 1, 2025, has been prolonged to 2027 to extend the efforts to tackle housing affordability challenges further.
- Protecting Canadian Homes: Minister Freeland stressed the primary goal of ensuring houses are used for Canadian families, discouraging them from becoming a speculative financial asset class.
- Government Commitment: The government is committed to using all available tools to enhance housing affordability nationwide.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act restricts non-Canadians from acquiring certain residential properties in designated areas.
What is included in the definition of ‘Residential Property’?
It includes detached houses containing not more than three dwelling units, part of buildings that are semi-detached houses, rowhouse built, residential condominium units along with any common areas and other appurtenances to the building and the land that is reasonably necessary for its use or enjoyments as a place for residence or any prescribed real property or immovable.
Who’s Considered a “Non-Canadian”?
Individuals not Canadian citizens, registered Indians under the Indian Act, or permanent residents, corporations incorporated outside Canada, corporations by foreign individuals, and prescribed persons/entities.
What are Non-Canadian Corporations?
These are corporations where non-Canadians have formal control, maintaining 10% or more of the company’s equity or voting rights. Informal control can also apply, where non-Canadians control the corporation “in fact” through ownership, agreement, or other means.
What comes under “purchased”?
Purchase of residential property includes the acquisition of legal or equitable interest, with or without conditions. Exceptions include:
- – Acquisition through death, divorce, separation, or gift by an individual.
- – Rental of a dwelling unit to a tenant for their occupation.
- – Transfer under a pre-existing trust.
- – Transfer due to the exercise of a security interest by a secured creditor.
- – Acquisition by a non-Canadian for development purposes. As of March 27, 2023, residential properties purchased for development are not subject to the Act. Converting a personal use property into a rental property does not qualify as a development.
However, there are some exemptions to the ban on foreign homebuyers.
Exemptions Under the Act
Certain people are exempt from the ban:
- Temporary residents
To qualify under paragraph 4(2)(a) of the Act, temporary residents must satisfy one of the following conditions:
- Option A: Enrolled in a Study Program at a designated learning institution,
- – Filed all required income tax returns for each of the five taxation years preceding the year of purchase,
- – Maintained a physical presence in Canada for at least 244 days in each of the last five calendar years,
- – Purchased a residential property under $500,000 and
- – Has not purchased more than one residential property; or
- Option B: Hold a valid Work Permit or are authorized to work in Canada,
- – Must have 183 days or more of validity remaining on their work permit at the time of purchase and
- – Has not purchased more than one residential property.
- Protected persons
A protected person is an individual who receives Refugee protection when:
- – They are determined to be a Convention refugee or a person in similar circumstances under a visa application, and become permanent resident or a temporary resident under a temporary resident permit for protection reasons.
- – The Immigration and Refugee Board (IRB) determines the individual to be a Convention refugee or a person in need of protection.
- – The Minister approves an application for protection unless such person is inadmissible in Canada based on the listed grounds under Section 112(3) of the Immigration and Refugee Protection Act.
- Non-Canadian individuals buying with a Canadian spouse or partner
A non-Canadian individual purchasing residential property in Canada alongside their spouse or common-law partner provided the spouse or partner is a Canadian citizen, registered as an Indian under the Indian Act, a permanent resident, or falls under “temporary resident” or “protected person”.
*A common-law partner is someone who shares a conjugal relationship and has lived together with the individual for a minimum period of one year.
- Persons of prescribed classes
Under paragraph 4(2)(d) of the Act, the following categories of individuals are prescribed:
- – Foreign nationals with a valid diplomatic passport issued by the Chief of Protocol.
- – Foreign nationals with valid temporary resident status which was issued or granted by the Ministry under the exemption provided under Section 25.2 of the Immigration and Refugee Protection Act for public policy reasons to provide a safe haven to those fleeing conflict.
- – Individuals with an eligible refugee claim referred to the Refugee Protection Division under subsection 100(1) of the Immigration and Refugee Protection Act.
Seeking Further Information
For additional details or to discuss how these changes may impact your situation, contact our legal team at info@nanda.ca. We can provide guidance and answer questions about this extension and its legal implications.
At Nanda & Associate Lawyers, we specialize in real estate law and can provide expert guidance to help you navigate the legal complexities of real estate transactions.
Whether buying, selling, or investing in real estate, our experienced attorneys are here to assist you every step of the way.
Contact us today to schedule a consultation and ensure a seamless real estate transaction. Your peace of mind is our priority.
