How Recent Updates Clear Up Canada’s Property Purchase Prohibitions for Foreign Nationals
On Jan. 1, 2023, the Canadian government officially enacted the Regulations for the Prohibition on the Purchase of Residential Real Property by Non-Canadians Act, its initiative to curb foreigner individuals from purchasing residential real estate in the country for a period of two years.
A few months later, on March 27, Canada announced the implementation of new amendments to the act that both cleared up the legislation’s vagueness and relaxed the rules governing the purchase of real estate by foreign nationals in Canada.
Interested in purchasing residential property in Canada as a non-citizen? Here are the key takeaways you should know from the government’s most recent amendments to the Regulations for the Prohibition on the Purchase of Residential Real Property by Non-Canadians Act.
- Amending the definition of “residential property”: While the initial act’s definition of residential property was ambiguous, the amendments clarify that “residential property” in this circumstance does not refer to land without a habitable dwelling that is zoned for mixed or residential use, meaning non-Canadians can purchase undeveloped residential or mixed-use land with no issues.
- Loosening prohibitions on non-Canadians: The amendments stipulate that non-Canadians are allowed to purchase vacant land or properties with the exception of those with a single building holding up to three residences or divided structures such as townhouses or condos meant to be parceled.They can utilize this land however they wish, including building residences, as long as they follow local building and zoning regulations.
- Broader Property Acquisition Privileges for Entities: The amendments now allow non-Canadians to buy residential property in Canada for various development purposes, including commercial, industrial, or residential projects, as long as they adhere to local zoning laws. Additionally, non-Canadian controlled entities, like real estate investment trusts or limited partnerships formed under Canadian laws and publicly traded in Canada, are given the same exceptions as non-Canadian controlled corporations that are incorporated and publicly traded in the country.
- Shifting definitions of “control”: The amendments clarify which level of control designates an entity as “non-Canadian.” The threshold has now been increased from 3% equity value or voting rights for direct or indirect ownership of an entity to 10% equity value or voting rights for direct or indirect ownership of an entity.
- Revising development exemptions: In the amendments, non-Canadians are now permitted to acquire property specifically for development purposes, which won’t be classified as a “purchase” under the act. However, clarity on what precisely constitutes “development” as defined by the Canadian government remains vague.
- New provisions for work permit holders: Individuals holding Canadian work permits valid for at least 183 days will now be exempt from the act, permitting them to buy property in Canada.
- Clarified penalties: Non-Canadians breaching the act will face criminal charges and a $10,000 fine. Similarly, Canadians knowingly assisting in such violations will also incur penalties and criminal liability.
While the recent amendments to the Regulations for the Prohibition on the Purchase of Residential Real Property by Non-Canadians Act may clear up some doubts surrounding the property purchase legislation, foreign nationals interested in buying property in Canada are advised to consult with an attorney from our team to ensure compliance with the law. Book your consultation with Exeo today via email or our contact form.