Foreign Home Buyers in Ontario, Canada

Hello from Ottawa.

One question I often get asked by some of my clients is whether they can purchase a property. For several years now, both the Federal Government and the Ontario Provincial government tried to reign in the soaring real estate prices and multiple laws, and regulations by both orders of government have been implemented, which created a lot of confusion both for buyers and for real estate professionals. If you are a student on a study permit or a worker on an open or sponsored work permit, you probably are wondering how these new regulations affect you. I will try my best to explain how these new laws and regulations will affect you. If you need specific advice for your situation, please contact me directly.

What is the Prohibition on the Purchase of Residential Property by Non-Canadians Act and The Non-Resident Speculation Tax (NRST)

In Canada, both Federal and Provincial governments can pass legislation and regulations on matters related to their perspective legislative powers. While most powers are exclusive to each order of government, some areas are of shared jurisdiction, including taxation, property, and civil rights. 

The Canadian federal government This ban was announced by the federal government as part of its April budget and came into effect on January 1st, 2023. This effectively bans anyone who is not a Canadian citizen nor a person under the Indian Act nor a permanent resident to purchase any residential properties of  3 dwellings units or less located in a Census Metropolitan Area (CMA) and Census Agglomerations (CA)(Prohibition on the Purchase of Residential Property by Non-Canadians Act – Frequently asked questions | CMHC (cmhc-schl.gc.ca). There are some exemptions, however, including the following:

• If you are on a study permit and enrolled in a designated program 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
• If you are on a valid work permit or authorized to work in Canada, and:
• have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase, and
• have not previously purchased a residential property in Canada while the prohibition is in effect
• If you are a Refugee or Refugee Claimants and:
• have been given refugee protection or are a protected person under the Immigration and Refugee Protection Act
• have made a claim for refugee protection in accordance with the Immigration and Refugee Protection Act, if that claim has been found eligible and referred to the Refugee Protection Division; or
• have received temporary resident status in accordance with the Immigration and Refugee Protection Act based on humanitarian public policy considerations to provide a safe haven to those fleeing conflict
• If you hold a passport that has a valid diplomatic, consular, official, or special representative acceptance issued by the Chief of Protocol of Canada
• If you are a Non-Canadian spouse and common-law partner and purchase residential property in Canada with their spouse or common-law partner who is a Canadian citizen, a person registered under the Indian Act, a permanent resident or a non-Canadian for whom the prohibition does not apply.

The above information is from CMHC’s: Prohibition on the Purchase of Residential Property by Non-Canadians Act | CMHC (cmhc-schl.gc.ca)

Please note that this legislation and associated regulations are in effect for 2 years, and will have to be renewed/rescinded by December 31, 2024. 

Once you determine that you have the right to purchase a residential property in Canada, you’d have to verify whether you are subject to the Non-Resident Speculation Tax (NRST) by the Ontario Government. The NRST is a tax that applies to the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are foreign nationals (individuals who are not Canadian citizens or permanent residents of Canada) or by foreign corporations or taxable trustees. The NRST applies in addition to the general Land Transfer Tax (LTT) in Ontario. Basically, anyone who is not a Permanent Resident and/or Canadian Citizen will have to pay the NRST as part of their closing costs. Effective October 25, 2022, the Non-Resident Speculation Tax (NRST) rate was increased to 25 percent. The NRST is applicable to any residential properties in Ontario with at least one but not more than 6 single-family units, including seasonal cottages/residences and condominiums.

Exemptions from the NRST include foreign nationals who are nominated under the Ontario Immigrant Nominee Program (OINP) at the time of the purchase or acquisition if the property is used as a foreign national’s principal residence²⁴. Protected Persons (Refugee) and spouses of Permanent Resident or Canadian Citizens. 

For any purchases made after March 29, 2022, if you become a Permanent Resident within 4 years of buying your property, you could be reimbursed for your NRST if the following conditions are met Non-Resident Speculation Tax | Land Transfer Tax | ontario.ca:

• hold the property alone or with their spouse only, and
• occupy the property, along with their spouse, if applicable, as their principal residence for the duration of the period that begins within 60 days after the date of purchase and ends when they make an application for the rebate or the rebate conditions have been met, whichever is later.

And you will have to apply to Ontario government within 90 days of you becoming a PR (not after you receive your PR Card as noted here: Non-Resident Speculation Tax | Land Transfer Tax | ontario.ca

So that is in a nutshell whether you can purchase residential properties in Canada if you are on a study permit/work permit. Please note that you can still purchase commercial/industrial or agricultural properties as of June 2023. While I do my best to provide you with the relevant information, I am not a lawyer so this is not a legal advice post. Please connect with me if you have specific questions based on your situation or discuss them with a legal professional.