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• Authors: Nolan Degiacomo, Marc Laatu
• Date: August 13, 2024

INTRODUCTION

The purchase of Canadian property by non-residents has become more complicated with the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”), which came in force January 1, 2023. This bulletin summarizes some of the key issues facing Non-Canadians when purchasing Residential Property in Canada.

 

THE PROHIBITION AND TYPES OF PROPERTY

The Act prohibits Non-Canadians from purchasing residential property (either directly or indirectly) located within a Census Metropolitan or Census Agglomeration area.

A Non-Canadian is defined under the Act as:

• persons who are neither citizens of Canada, permanent residents of Canada, nor persons registered as Indian under the Indian Act;
• corporations not incorporated in Canada;
• corporations incorporated in Canada that are not controlled by a citizen of Canada, permanent resident of Canada, or a person registered as Indian under the Indian Act;
• certain other entities formed otherwise than under the laws of Canada or a province; and
• certain other entities formed under the laws of Canada or a province, but controlled by one of the foregoing persons.

A residential property is defined under the act as any real property or immovable located within a Census Metropolitan or Census Agglomeration area and that is:

• a detached house or similar building containing not more than three dwelling units;
• a part of a building that is a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel; and
• land that does not contain any habitable dwelling and is zoned for residential use or mixed use.

CENSUS METROPOLITAN AREA & CENSUS AGGLOMERATION

Non-Canadians can purchase property outside of Census Metropolitan and Census Agglomeration areas. Census Metropolitan and Agglomeration areas are documented and defined by Statistics Canada.[1] Below is the most recent Thunder Bay map for the Census Metropolitan area,[2]

The Census Agglomeration does not apply to Thunder Bay but applies to smaller cities. Such cities in Ontario within the Agglomeration are North Bay, Sault St. Marie and Sarnia.[3] Therefore, Thunder Bay, and (some) surrounding areas apply to the Prohibition. The prohibition does not apply to outside the Census Metropolitan or Agglomeration.

 

TEMPORARY RESIDENTS

There are exemptions to the prohibition for temporary residents of Canada who fall under specific conditions.[4] One exemption to qualify as a temporary resident would to be enrolled in a designated learning institution.[5] Additionally to being enrolled in a designated learning institution, the temporary resident must also fall under all the following conditions:

(i) they filed all required income tax returns under the Income Tax Act for each of the five taxation years preceding the year in which the purchase was made,

(ii) they were physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase was made,

(iii) the purchase price of the residential property does not exceed $500,000, and

(iv) they have not purchased more than one residential property.[6]

 

The other exemption for temporary residents would to be in possession of a work permit.[7] A temporary resident with a work permit must fall under the following conditions:

(i) they have 183 days or more of validity remaining on their work permit or work authorization on the date of purchase, and

(ii) they have not purchased more than one residential property.

 

Additionally, a temporary resident does not have to hold a work permit to be able to purchase property. If a temporary resident is authorized to work in Canada according to section 186 of the Immigration and Refugee Protection Regulations, they can purchase property (but still fall under the conditions above).[8] Section 186 of the Immigration and Refugee Protection Regulations has a lengthy list of circumstances regarding to working without a permit, which can be found within the footnote below.[9]

 

PERMANENT RESIDENT

The Prohibition does not apply to permanent residents.[10]

 

REFUGEES

Refugees are exempt from the prohibition if they have been found eligible according to the Immigration and Refugee Protection Act (found eligible by an officer).

PENALTIES

Contravention of the Act and corresponding regulations can result in a fine of up to $10,000.00. Non-Canadians who purchase residential properties in the face of the prohibition are liable for the fine, as well as any person that knowingly participates in or facilitates a prohibited real estate transaction, including, potentially, lawyers, brokers and realtors.

 

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Buying a house is exciting, however it can very quickly become a complicated and stressful process. Having experienced professionals you trust guide you during this process can increase the chances that your purchase will run smoothly and reduce the likelihood of headaches down the road.

Whether you are a permanent resident or a Non-Canadian purchasing residential real estate, our experienced team of real estate lawyers at CARREL+Partners LLP is here to help guide you every step of the way. Get in touch today.

 

Disclaimer:

This publication is for general information purposes and is not to be taken as legal advice. The information within is current only to the date of publishing. If you have any questions regarding article content, please contact the author(s) directly.

[1] Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250, s.1

[2] 2021-92146-595-00.pdf (statcan.gc.ca)

[3] Census 2021 – Census Tract Reference Maps (statcan.gc.ca)

[4] Prohibition on the Purchase of Residential Property by Non-Canadians Act S.C. 2022, c. 10, s. 235, s.4(2)(a).

[5] Supra note 1 at 5(a).

[6] Ibid.

[7] Supra note 1 at 5(b).

[8] Ibid.

[9] SOR/2002-227 | Immigration and Refugee Protection Regulations | CanLII at s.186.

[10] Supra note 1 at 2(a).