{"id":6517,"date":"2022-12-30T12:06:22","date_gmt":"2022-12-30T20:06:22","guid":{"rendered":"https:\/\/www.thor.ca\/?post_type=tax_alert&#038;p=6517"},"modified":"2025-02-21T12:23:34","modified_gmt":"2025-02-21T20:23:34","slug":"canadian-foreign-home-buyers-ban-coming-into-effect","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2022\/12\/canadian-foreign-home-buyers-ban-coming-into-effect\/","title":{"rendered":"Canadian foreign home buyers ban coming into effect"},"content":{"rendered":"<p>The <a href=\"https:\/\/laws-lois.justice.gc.ca\/eng\/acts\/P-25.2\/index.html\"><em>Prohibition on the Purchase of Residential Property by Non-Canadians Ac<\/em><em>t<\/em><\/a> (the \u201cAct\u201d) enters into force this Sunday (January 1, 2023). As supplemented by detailed <a href=\"https:\/\/canadagazette.gc.ca\/rp-pr\/p2\/2022\/2022-12-21\/html\/sor-dors250-eng.html\">regulations<\/a> (the \u201cRegulations\u201d), the Act prohibits any \u201cnon-Canadian\u201d from purchasing, directly or indirectly, residential properties located in many municipalities across Canada. The Act will be automatically repealed on January 1, 2025, meaning the ban is slated to only be in effect for a two-year period.<\/p>\n<p>Under the Act, a <em>non-Canadian<\/em> includes:<\/p>\n<ul>\n<li>an individual who is not a Canadian citizen, permanent resident, or registered as an \u201cIndian\u201d under the <em>Indian Act <\/em>(note that income tax residency is irrelevant);<\/li>\n<li>a corporation or other \u201centity\u201d (not defined in the Act but stated by the CMHC in its <a href=\"https:\/\/www.cmhc-schl.gc.ca\/en\/media-newsroom\/notices\/2022\/ensuring-housing-owned-canadians\">FAQ<\/a> as intended to include partnerships and trusts) not incorporated or formed under the laws of Canada or a province; and<\/li>\n<li>private corporations or entities that are \u201ccontrolled\u201d by one or more non-Canadian individuals, corporations, or entities described above.<\/li>\n<\/ul>\n<p>Exclusions apply to qualifying temporary residents and protected persons (each within the meaning of the <a href=\"https:\/\/laws-lois.justice.gc.ca\/eng\/acts\/I-2.5\"><em>Immigration and Refugee Protection Act<\/em><\/a>), refugee protection claimants, foreign diplomats, and spouses of a Canadian citizen, permanent resident, or registered \u201cIndian\u201d who purchase the property jointly with their spouse.<\/p>\n<p>Under the Regulations, \u201ccontrol\u201d is defined to mean both: (a) direct or indirect ownership of shares or interests representing <u>3%<\/u> or more of the votes or equity value of the corporation or entity; and (b) factual control, directly or indirectly and whether through ownership, agreement or otherwise. A 3% threshold for determining control is extremely low and difficult to reconcile with the common understanding of \u201ccontrol\u201d (or past jurisprudence interpreting that term). This may represent a significant trap for unwary purchasers and their advisors.<\/p>\n<p>Under the Regulations, \u201cpurchase\u201d is defined broadly to mean the acquisition, with or without conditions, of any legal or equitable interest or real right in a residential property. That said, exclusions exist for: acquisitions resulting from death, divorce, separation, or gift; tenancy arrangements (if the tenant occupies the property themselves); transfers under trusts created prior to January 1, 2023; and transfers following the exercise of a security interest by a secured creditor. In addition, only residential properties (defined to include vacant land zoned for residential or mixed use) located within a census agglomeration or census metropolitan area, within the meaning of Statistics Canada\u2019s <em>Standard Geographical Classification (SGC) 2021 <\/em>(illustrated <a href=\"https:\/\/www12.statcan.gc.ca\/census-recensement\/2021\/geo\/maps-cartes\/referencemaps-cartesdereference\/sgc-cgt\/files-fichiers\/2021-12572-01-B.pdf\">here<\/a>), are caught.<\/p>\n<p>Consequences for acquiring a property in contravention of the Act include fines up to $10,000 and a court-ordered sale of the property. Fines also extend to persons or entities that knowingly (or attempt to) counsel, induce, aid or abet a non-Canadian to acquire property in contravention of the Act. If a forced sale of the property occurs, the non-Canadian cannot receive proceeds greater than their original purchase price; in other words, they are prevented from realizing any profit on the sale.<\/p>\n<p>The Act and Regulations contain additional limitations and exclusions to those described above. For the next two years, those who are, or may be, a \u201cnon-Canadian\u201d should seek legal advice well in advance of acquiring Canadian residential real estate.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The <a href=\"https:\/\/laws-lois.justice.gc.ca\/eng\/acts\/P-25.2\/index.html\"><em>Prohibition on the Purchase of Residential Property by Non-Canadians Ac<\/em><em>t<\/em><\/a> (the \u201cAct\u201d) enters into force this Sunday (January 1, 2023). As supplemented by detailed <a href=\"https:\/\/canadagazette.gc.ca\/rp-pr\/p2\/2022\/2022-12-21\/html\/sor-dors250-eng.html\">regulations<\/a> (the \u201cRegulations\u201d), the Act prohibits any \u201cnon-Canadian\u201d from purchasing, directly or indirectly,&hellip;<\/p>\n","protected":false},"author":20,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53],"tags":[],"class_list":["post-6517","post","type-post","status-publish","format-standard","hentry","category-tax-alerts"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/6517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=6517"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/6517\/revisions"}],"predecessor-version":[{"id":7256,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/6517\/revisions\/7256"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=6517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=6517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=6517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}