Background
The federal government’s ban on new foreign ownership of residential property became law on January 1, 2023. This ban prohibits anyone who is not a Canadian citizen or permanent resident from buying residential real estate for two years. The government plans to work with provinces and municipalities to regulate the role of foreign buyers in the housing market and ensure housing is available for Canadians.
The Liberal Party Promise
The Liberal Party promised the ownership ban in the 2021 election and included it in the federal Budget 2022. The goal is to make the housing market fairer for Canadians and prevent foreign buyers from parking their money in Canada by buying homes.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act
The government tabled Bill C-19, the Budget Implementation Act, 2022, No. 1, which received Royal Assent on June 23, 2022. Section 235 of the bill is the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
Who Cannot Buy Residential Property?
The act defines a non-Canadian as an individual who is not a Canadian citizen, permanent resident, or person registered as an Indian under the Indian Act. Additionally, it includes corporations not incorporated under Canadian law, corporations with shares not listed on a Canadian stock exchange, and prescribed persons or entities. Exceptions include temporary residents and non-Canadians who buy residential property with a Canadian spouse or common-law partner.
Definition of Residential Property
Residential property includes detached houses, semi-detached houses, condominiums, vacant land zoned for residential use, and prescribed real property.
Penalties
Non-Canadians found guilty of contravening the act face a fine of up to $10,000. If the federal government orders the sale of the property, the non-Canadian buyer will not receive more than the amount paid for the property.
Property Purchased Before January 1, 2023
The ban does not apply to agreements of purchase and sale dated before January 1, 2023.
Future Regulations
Future regulations will provide more details on prohibited purchases and whether exceptions apply to conditional contracts entered into before January 1, 2023.
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