Information from CREA:
What is the Prohibition on the Purchase of Residential Property by Non-Canadians Act?
On June 23, 2022, Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Coming into force Sunday, January 1, 2023, this Act:
- Does not apply to Canadian citizens or permanent residents.
- Applies to non-Canadians directly or indirectly purchasing residential property in Canada for a period of two years.
- Applies to residential property, including detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, condominium units, or other similar premises.
- Applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.
- Establishes penalties for non-compliance applicable to non-Canadians, as well as any person or entity knowingly assisting a non-Canadian in violating the prohibition.
What are some of the key elements covered in the regulations?
Purchase
The regulations broadly define the term purchase to include the direct or indirect acquisition of a right or interest in Residential Property. The regulations then specifically exclude, among other things, acquisitions of interests resulting from transitional or life events such as death, divorce, separation, or a gift.
Application of Prohibition to Non-Canadian corporations and other entities The term Non-Canadian,as it relates to corporations and other entities, has been defined as:
- an entity not formed pursuant to the laws of Canada or one of its provinces; and
- an entity formed under Canada’s laws that has direct or indirect ownership by a Non-Canadian of 3% or more of the value of the entity’s equity or voting rights.
Excluded residential properties
Properties located outside of a Census Agglomeration (CA) or Census Metropolitan Area (CMA) are excluded from this prohibition.
Exceptions
Exceptions to the prohibition are permitted for international students, temporary residents, foreign nationals, and refugee claimants, subject to varying conditions, such as tax filing and residency obligations. For further details, please consult the regulations and/or ensure the buyer who may fall into one of these exception groups seeks legal advice on their eligibility.
Additional guidance
Further to the information that has been provided in the regulations, Canada Mortgage and Housing Corporation (CMHC) has released additional information and FAQs with respect to the interpretation of the Act and regulations.
This guidance provided above is not a substitute for obtaining legal advice.
