The Parliament of Canada is prohibiting the purchase of Canadian residential property by foreign investors from January 1st, 2023, to December 31st, 2024. The relevant legislation, adopted on June 23rd, 2022, is called the Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s. 235.
On December 21, 2022, the Parliament clarified certain provisions of the Act by publishing complementary regulations, called the Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250.
During the prohibition period, residential properties can only be purchased by:
- Canadian citizens, permanent residents and persons registered as Indians under the Indian Act;
- Temporary foreign workers with a valid permit who have worked full-time for at least 3 out of the 4 last years;
- Students with a valid permit who have been physically present in Canada for at least 244 days over the last 5 years and purchase a residential property of CAD 500,000 or less;
- Diplomatic, consular or special officials;
- Refugees and asylum seekers whose claims were found valid.
- Corporations and other legal entities incorporated under the laws of Canada or of a province, except if they are not listed on a Canadian stock exchange and they are controlled by non-Canadians.
For the purpose of this last point, the notion of “control” includes the ownership of at least 3% of the corporation or the entity’s shares or voting rights, or their factual control, whether directly or indirectly.
The prohibition applies only to the purchase of residential property. This includes any form of acquisition of an ownership interest or real right, except:
- the acquisition resulting from death, divorce, separation or a gift;
- the rental of a dwelling unit;
- the transfer to a trust created before the enactment of the Act;
- the transfer resulting from the exercise of a security interest or secured right.
Residential properties include the following, as long as they are located in a census metropolitan area or a census agglomeration:
- Detached houses or similar buildings with no more than 3 dwelling units;
- Semi-detached houses, rowhouse units, condominiums and other similar premises; and
- Lands without erected buildings, that are zoned for residential purposes or mixed uses.
Persons and corporations violating this prohibition exposes themselves to a fine of up to CAD 10,000. In addition, the property illegally acquired can be sold and no more than the acquisition price can be recovered.
For any questions in connections with real estate matters in Canada, our lawyers and Canadian notaries will assist you.
