The Act prohibiting the purchase of residential properties by non-Canadians, which came into effect in January 2023, has been extended until January 1, 2027 by the federal Department of Finance. This extension changes the game for any foreigner considering a real estate purchase in Canada. The exact scope of this law, its exceptions, and the mortgage arrangements available to non-residents deserve a precise technical reading.
Actual scope of the prohibition: what the law targets and what it ignores
The prohibition does not cover the entire Canadian residential market. It exclusively targets residential properties with three units or fewer located in a census metropolitan area (CMA) or a census agglomeration (CA). Specifically, a building with four or more units is exempt from the restriction, as is a property located outside of these urban areas defined by Statistics Canada.
This distinction is rarely made clear in consumer guides, which present the prohibition as a total block. We observe that several foreign buyers legally acquire multiplexes or properties in rural areas without violating federal law.
To understand precisely who can buy a house in Canada despite this restrictive framework, it is necessary to distinguish between the legal status of the buyer and the nature of the desired property.
Exceptions by immigration status: temporary residents, refugees, and spouses
The law provides for categories of exemption that make purchase possible even during the prohibition period. The relaxations adopted in March 2023 have significantly expanded these exceptions.
- Temporary residents holding a valid work permit: they can acquire a residential property for personal use, provided they do not own more than one property and meet certain presence criteria in the territory.
- Permanent residents and Canadian citizens: no restrictions. They purchase under the same conditions as any Canadian by birth.
- Spouses or common-law partners of a Canadian citizen or permanent resident: the exemption applies even if the foreign spouse does not have permanent status themselves.
- Recognized refugees and protected persons: exempt from the prohibition, including for a first purchase in Quebec with access to traditional mortgage programs.
Foreign students, on the other hand, remain subject to the prohibition for the residential properties covered by the law, unless they simultaneously hold an eligible work permit.
Mortgage for non-residents: down payment and banking requirements
Access to financing is the main friction point for a foreign buyer in Canada. Canadian financial institutions apply stricter criteria to borrowers without a local credit history.
The down payment required for a non-resident far exceeds the usual minimum. Where a permanent resident can obtain a mortgage with a reduced down payment (insured by the CMHC), a non-resident generally must provide a significantly higher down payment, often around one-third of the property’s value depending on the lender and risk profile.
Credit history and foreign income
Without a Canadian credit score, the borrower must provide a credit report from their country of origin, translated and certified. Some banks accept declared income from abroad but require independent verification by a certified accountant. Others simply refuse non-Canadian income.
We recommend contacting a mortgage broker specialized in non-resident clients before taking any steps. The interest rate offered will generally be higher than that offered to a resident, and CMHC mortgage insurance is not available to non-residents.
Taxes and fees specific to foreign buyers in Canada
Beyond the purchase price and mortgage, several taxes specifically target non-resident buyers. British Columbia applies a provincial surtax on purchases by foreigners in the Vancouver area. Ontario imposes a similar tax in the broader Golden Horseshoe region.
In Quebec, there is currently no specific provincial surtax for foreigners, making the Montreal market comparatively more accessible from a tax perspective. However, transfer duties (welcome tax) apply to all buyers, regardless of status.
Capital gains tax on resale
A non-resident selling real estate in Canada is subject to withholding tax on the proceeds of the sale. The Canada Revenue Agency requires a certificate of compliance before the balance is paid to the non-resident seller. Without this certificate, the notary or lawyer withholds a portion of the sale price in trust.
This obligation regularly surprises foreign investors who did not anticipate the administrative delays related to obtaining the certificate.
Real estate purchase in Canada by a foreign company: an additional lock
The 2023 law does not only target individuals. Companies incorporated abroad or controlled by non-Canadians are also prohibited from purchasing residential properties covered by the law. This provision closes the door on the corporate structure that previously allowed circumventing individual restrictions.
The penalties include fines that can lead to the obligation to resell the property acquired in violation. The effective property registry, gradually deployed in several provinces, enhances the traceability of acquisition structures.
The Canadian real estate market remains open to foreigners in specific segments (multiplexes, areas outside CMA/CA, commercial properties) and for exempt statuses. The key lies in the exact legal qualification of the property and the buyer’s status before any purchase offer. A notary or lawyer specialized in immigration and Canadian real estate law remains the first contact to consult, well before the real estate broker.