Foreign Buyer Ban (2023-2027)
Current Rules
| Prohibition |
Details |
| Start date |
January 1, 2023 |
| End date |
January 1, 2027 |
| Who’s banned |
Non-Canadians |
| What property |
Residential |
Who Is Affected
| Affected |
|
| Foreign nationals |
Non-citizens, non-PR |
| Foreign corporations |
Any ownership |
| Foreign-controlled Canadian corps |
|
Exemptions
| Allowed |
|
| Permanent residents |
Not banned |
| Work permit holders |
Some exemptions |
| Refugee claimants |
Exempt |
| International students |
Limited exemptions |
| Commercial property |
Not covered |
| Recreational/cottage |
Not primary target |
Penalties
| Violation |
Consequence |
| Illegal purchase |
Fine up to $10,000 |
| Property |
May be ordered sold |
| Professionals |
Also face penalties |
Provincial Foreign Buyer Taxes
BC Foreign Buyer Tax
| Tax |
20% |
| Where |
Specified areas (Metro Vancouver, etc.) |
| Who |
Foreign nationals, foreign corps |
| On |
Purchase price |
| Exemptions |
Some work permit, PR situations |
Ontario Non-Resident Speculation Tax
| Tax |
25% |
| Where |
Anywhere in Ontario |
| Who |
Foreign nationals, foreign corps |
| On |
Purchase price |
| Exemptions |
Some refund opportunities |
Other Provinces
| Province |
Foreign Buyer Tax |
| BC |
20% (specified areas) |
| Ontario |
25% |
| Other provinces |
Generally none |
Underused Housing Tax (UHT)
What It Is
| UHT |
|
| Annual tax |
1% of property value |
| Who must file |
Non-residents (all), some Canadians |
| Deadline |
April 30 each year |
| For |
Previous calendar year |
Who Must File
| Always File |
|
| Non-citizen/PR owners |
Even if exempt from tax |
| Trustee owners |
|
| Partner owners |
|
| Corporate owners |
Non-qualifying |
Who Owes the Tax
| Taxable |
Exempt from Tax |
| Vacant property |
Primary residence |
| Underused property |
Rented 180+ days |
|
Qualifying occupancy |
Filing Even if Exempt
| Requirement |
|
| Must file |
Every year |
| Claim exemption |
On the return |
| Failure to file |
$5,000+ penalty |
Property Value
| Calculation |
|
| Based on |
Greater of assessed value or recent sale |
| 1% of |
Property value |
Example
| Scenario |
|
| Non-resident owns condo |
|
| Value |
$500,000 |
| Vacant 2024 |
No qualified occupant |
| UHT owing |
$5,000 |
Rental Income Tax
Withholding Tax (Part XIII)
| Default Rule |
|
| Tax rate |
25% |
| On |
Gross rent |
| Withheld by |
Tenant or agent |
| Remitted to |
CRA |
Example Without Election
| Situation |
|
| Monthly rent |
$2,500 |
| Gross annual |
$30,000 |
| 25% withholding |
$7,500 |
| Your expenses |
Not considered |
Section 216 Election
| Better Option |
|
| File Canadian return |
Elect under s.216 |
| Report |
Net rental income |
| Deduct |
Expenses |
| Tax on |
Net income |
Example With Section 216
| Situation |
|
| Gross rent |
$30,000 |
| Expenses |
$18,000 |
| Net income |
$12,000 |
| Tax (~25% bracket) |
$3,000 |
| Savings |
$4,500 |
| Process |
|
| File NR6 |
Before year/before renting |
| CRA approves |
Reduced withholding |
| Withhold |
25% of net (not gross) |
| File s.216 return |
After year end |
Selling Canadian Property
Non-Resident Selling
| Process |
|
| 1. Notify CRA |
Before or within 10 days |
| 2. Get clearance certificate |
Required |
| 3. Otherwise |
Buyer withholds 25%+ |
Certificate of Compliance
| Form T2062 |
|
| File |
Before closing preferred |
| Purpose |
Calculate tax owing |
| If approved |
Buyer doesn’t withhold |
| Timeline |
6-8 weeks |
Without Certificate
| Buyer Must |
|
| Withhold |
25% of gross sale price |
| Remit to CRA |
Within 30 days |
| You |
File return to recover overpayment |
Capital Gains Tax
| Standard Rules |
|
| Gain calculation |
Sale price - ACB |
| Inclusion rate |
50% (or 66.67% over $250K) |
| Tax rate |
25% flat or file return |
Section 116 Compliance
| Non-Resident Seller |
|
| Must notify CRA |
Proposed disposition |
| Pay or post |
Security for tax |
| Get certificate |
Or buyer withholds |
Municipal Taxes
Vacant Home Taxes
| City |
Tax |
| Vancouver |
5% of assessed value |
| Toronto |
1% of assessed value |
| Ottawa |
1% of assessed value |
| Growing |
More cities adding |
Speculation and Vacancy Tax (BC)
| Tax |
|
| Rate |
0.5-2% of assessed value |
| Non-resident |
2% |
| Where |
Specified BC areas |
| Annual |
Filing required |
Tax Treaties
How Treaties Help
| Benefit |
|
| Reduced rates |
Some withholding |
| Tie-breaker rules |
Residency determination |
| Credits |
For tax paid |
Common Treaty Countries
| Country |
Treaty |
| USA |
Comprehensive |
| UK |
Comprehensive |
| Australia |
Yes |
| India |
Yes |
| China |
Yes |
US Residents
| Special Rules |
|
| Treaty rate |
May be lower |
| FIRPTA-like |
Canada has similar rules |
| Dual reporting |
May be required |
Financing as Non-Resident
Mortgage Challenges
| Issue |
|
| Higher down payment |
35%+ typical |
| Higher rates |
Risk premium |
| Limited lenders |
Fewer options |
| Documentation |
More requirements |
Common Requirements
| Requirement |
|
| Down payment |
35-50% |
| Credit check |
International credit |
| Income verification |
Employment, statements |
| Canadian bank account |
Usually required |
Record Keeping
Required Documentation
| Keep |
Duration |
| Purchase documents |
6 years after sale |
| Expense receipts |
6 years |
| Rental records |
6 years |
| Tax filings |
6 years |
| Improvement records |
6 years after sale |
Professional Help
Advisors Needed
| Professional |
Purpose |
| Cross-border accountant |
Tax compliance |
| Real estate lawyer |
Purchase/sale |
| Property manager |
If renting |
| Financial advisor |
Planning |
Compliance Calendar
Annual Requirements
| Date |
Requirement |
| April 30 |
UHT return due |
| Varies |
S.216 return (6 months after year end) |
| Ongoing |
NR6 approval |
| BC |
Speculation tax declaration (March) |
| Municipal |
Vacant home declarations |