The Restrictions on the Purchase of Residential Property by Non-Canadians Act was passed in Parliament in June 2022 and came into effect on January 1 this year.
Broadly speaking, the new rules will prohibit the purchase of residential property by a foreign investor who is not a Canadian citizen or permanent resident. The rules will remain in place for two years and then automatically get cancelled.
The Act specifically prohibits foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada.
Residential property includes detached homes or similar buildings, semi-detached homes, rowhouse units, residential condominium units, and other similar premises.
The government introduced the Act in Budget 2022 as part of Canada’s strategy to reduce the cost of housing, which has risen in recent years.
Data from the Canadian Real Estate Association (CREA) shows the median home price in February 2022 was $816,720. By November 2022 it has fallen to $632,802.
The government has cited foreign investors buying homes in Canada, while never actually living in them, as a driving force in rising residential home prices.
What are the exceptions?
The new Act is not an absolute ban on buying property by foreign investors. They are still allowed to buy recreational properties such as cottages and holiday homes. Properties with more than three separate units are also exempt.
Additionally, the Act does not cover households that are outside census metropolitan areas (cities with populations over 100,000).
There are also exceptions for non-Canadians who buy a home with a Canadian spouse or common-law partner who later finds themselves in a transitional situation, such as a divorce, or a non-Canadian who has died. After that the house is inherited.
Can Temporary Residents Buy a Home in Canada?
The Act does not apply to Canadian citizens or permanent residents. Temporary residents who are on a valid study or work permit are still eligible to buy a home in Canada. However, there are several conditions for temporary residents as the government requires proof of intent to settle and become a permanent resident.
For example, a person who is enrolled in a program of authorized study at a designated educational institution in Canada must meet at least one of the following criteria:
- He filed all the income tax returns required under the Income Tax Act for each of the five taxation years preceding the year in which the purchase was made,
- They were physically present in Canada for at least 244 days in each of the five calendar years preceding the year in which the purchase was made,
- the purchase price of the residential property does not exceed $500,000, and
- He has not bought more than one residential property
This means that anyone looking to buy a home in Canada on a study permit must be able to prove that they were in the country for 244 days in each of the previous five years before making the purchase. They also require proof of having filed a tax return in Canada for the same period.
It’s also important to note that the maximum purchase price of $500,000 for a home probably isn’t enough to buy a home in Ontario or British Columbia, where the median home price is still over $800,000 and the housing crisis is most acute.
People who are in Canada on a valid work permit also have conditions they must meet:
- they worked in Canada for a minimum period of three years in the four years preceding the year in which the purchase was made, if the work is full-time work as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations Yes, (IRPA).
- He has filed all required income tax returns under the Income Tax Act for at least three of the four taxation years preceding the year in which the purchase was made, and
- He has not purchased more than one residential property.
In this example, the time spent in Canada is less than those who are studying, but work permit holders must still show at least three years of full-time work and tax returns for the past four years.
The Act also states that non-Canadians are responsible for demonstrating their eligibility to a Canadian realtor. Temporary residents are responsible for all costs involved in obtaining proof of eligibility, such as obtaining documents regarding a work permit and notice of assessment. They may also require documents to demonstrate physical presence in Canada such as a rental agreement, utility bills or entry and exit records in Canada.
What are the penalties?
A foreign investor who seeks to purchase a restricted residential property in Canada, or anyone who knowingly assists them, will have committed an offense and will be liable to a fine of up to $10,000. Additionally, the High Court of the province where the property is located can order that the property be sold.
© CIC Updates All Rights Reserved. Visit Worldoverseasimmigration.com to find your Canadian immigration options.
[ad_2]