Foreign investors, read attentively !
Did you know?
Starting January 1, 2023, the Government of Canada is planning to put a ban on the purchase of residential properties by non-residents of Canada. If you are a non-resident, or have non-resident family members who want to invest in Canadian real estate, don’t wait!
Learn more on this moratorium in the following text, written by Julie Côté, non-resident and real-estate tax manager at FL Fuller Landau :
«2 years ban for foreigner’s new acquisitions of residential properties in Canada
Per the latest federal budget, a new Federal ban on the purchase of any residential property by non-Canadians (Bill C-19), that should come in effect on January 1st, 2023
This ban is for a duration of 2 calendar years and should end on December 31st, 2024, with possibility of renewal.»
Who is concerned?
The new federal ban will apply to you if you are a foreign individual, trust, foreign corporation, or a Canadian corporation controlled by a foreign entity or individual.
Exemptions
«You might be exempted if:
1. You are a Canadian citizen or a permanent resident of Canada (with a valid residency card), or an accepted refugee. Other visa holders could be exempted (clarifications to come).
2. You are buying the property in co-ownership with your Canadian citizen or permanent resident spouse (details on requirements to come).
3. You are purchasing a multiplex consisting of three (3) dwellings or more, i.e.: triplex.
4. You are purchasing a commercial usage property, i.e.: an office space or a retail store.
5. You signed a offer to purchase contract with the vendor prior to January 1st, 2023.
6. The property is situated in recreational areas, such as Mont-Tremblant and Whistler, that can only be used for vacation purposes (clarifications to come).»
In case of a breach in the law…
«This means that ALL foreigners will be strictly forbidden from purchasing Canadian residential properties. At this time, we do not know who will have the responsibility of verifying citizenship and eligibility, but we assume it will be the title attorneys (notary)– most likely at the time of closing. If there is a breach in the law, the buyer can be fined up to 10,000$ CAN and be forced to resell the property, at a price equal to or lesser than acquisition cost in order to forbid them from making a profit.»
Other changes to come
«Also announced in the latest federal budget is a new rule to ensure profits from flipping properties are taxed fully and fairly. Starting January 1st, 2023, any individual who sells a property held for less than 12 months would be considered to be flipping properties and would be taxed 100% as business income. Therefore, the 50% capital gain exemption would not be granted. Exemptions could apply for Canadians who sell their home due to certain life circumstances, such as a death, disability, the birth of a child, a new job, or a divorce.»
The goal
Why does the federal government plan to limit the purchase of properties by non-Canadians? According to the Canadian Real Estate Association (CREA), the goal would be to slow down the market and to give more chances to Canadians to be able to afford a property. To learn more about CREA’s predictions on the impact of this upcoming new law, click here.
Questions?
This is still unclear and you have more questions regarding this ban ? Feel free to contact Julie Côté at jcote@flmontreal.com.