Can a foreigner buy property in Canada?

Property ownership in Canada is legally open to foreign nationals, but the rules have tightened considerably in recent years. A non-resident can purchase residential, commercial or agricultural land, subject to federal legislation, provincial statutes and municipal zoning rules that together determine what is permitted, at what cost and under what conditions. This guide covers the current federal ban on foreign residential buyers, the key exceptions, provincial-level restrictions, taxes and fees that apply specifically to non-residents, the practical steps to complete a purchase, and the ongoing compliance obligations that follow.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act is the central federal instrument governing foreign participation in the residential real estate market. The Act prohibits non-Canadian individuals and foreign commercial enterprises from purchasing residential property in Canada. For the purposes of the Act, "residential property" covers detached houses, semi-detached houses, rowhouses, condominium units and similar dwellings located in a census metropolitan area or a census agglomeration.

The prohibition applies to individuals who are neither Canadian citizens nor permanent residents. It also applies to corporations that are not incorporated under Canadian law or that are controlled by non-Canadians. The Act defines control broadly, so a Canadian-incorporated company with significant foreign ownership can still fall within the prohibition.

Violations carry serious consequences. A person who purchases property in contravention of the Act, or who knowingly assists in such a purchase, may be convicted of an offence and fined. Courts are also empowered to order the sale of the property. These are not theoretical risks: the legislation includes enforcement mechanisms and reporting obligations for conveyancers and real estate lawyers.

The prohibition was introduced as a temporary measure to cool residential markets, and its duration has been extended by regulation. Buyers should verify the current status of the prohibition and any applicable extensions before proceeding, as the legislative landscape continues to evolve.

The prohibition contains several important exceptions that allow certain foreign nationals to purchase residential property in Canada. Understanding these carve-outs is essential before concluding that a purchase is blocked.

Temporary residents who hold a valid study permit and meet specific conditions - including having filed Canadian income tax returns for the required number of years and having purchased a property below a defined value threshold - may be exempt. Similarly, temporary residents holding a valid work permit or work authorisation may qualify if they have worked full-time in Canada for a minimum period and meet the tax-filing requirement.

Refugees and protected persons recognised under the Immigration and Refugee Protection Act are also exempt. Spouses or common-law partners of Canadian citizens or permanent residents purchasing jointly with their Canadian partner are not caught by the prohibition, provided the Canadian partner is a co-purchaser on title.

Diplomatic personnel and certain international organisation representatives are excluded. Purchases made under a divorce order or separation agreement, or acquisitions through inheritance, also fall outside the prohibition';s scope.

Commercial and industrial properties are not residential property under the Act and therefore remain fully accessible to foreign buyers. Vacant land zoned exclusively for non-residential use is similarly unaffected. This distinction matters greatly for investors whose primary interest is in office buildings, retail units, industrial warehouses or development land.

In practice, founders and investors should consider obtaining a formal legal opinion on whether their specific situation falls within an exemption before signing any purchase agreement. A common mistake is assuming that holding a Canadian company automatically resolves the issue - the Act';s control test means that corporate structuring alone does not guarantee compliance.

Beyond the federal prohibition, several provinces have enacted their own restrictions on foreign land ownership. These operate independently and can apply even where the federal prohibition does not.

British Columbia imposes a Foreign Buyers Tax - formally the Additional Property Transfer Tax - on transfers of residential property to foreign nationals and foreign-controlled corporations in specified regional districts. The rate is substantial, applied on top of the standard Property Transfer Tax. The tax applies at the time of registration and must be paid before title transfers.

Ontario applies a Non-Resident Speculation Tax on the purchase of residential property in designated areas of the province by foreign nationals and foreign corporations. The rate has been increased in recent years and now applies province-wide rather than only in the Greater Golden Horseshoe region. Certain exemptions exist for nominees under provincial immigration streams, protected persons and spouses of Canadian citizens.

Prince Edward Island restricts the purchase of land exceeding a defined acreage threshold by non-residents, whether Canadian or foreign. Purchases above the threshold require approval from the Island Regulatory and Appeals Commission. Agricultural land is subject to particularly strict limits, reflecting the province';s concern about foreign ownership of farmland.

Nova Scotia introduced its own non-resident deed transfer tax on residential property purchases by non-residents of the province. The tax applies broadly to individuals who are not ordinarily resident in Nova Scotia, not only to foreign nationals.

Quebec does not currently impose a province-wide foreign buyer tax, but municipalities including Montreal have explored local measures. Quebec';s civil law system also means that property transactions follow a notarial deed process rather than the common law conveyancing model used in other provinces, which affects the documentation and professional fees involved.

Many underestimate the cumulative effect of federal and provincial measures. A foreign buyer of a Toronto condominium, for example, faces both the federal prohibition (unless exempt) and the Ontario Non-Resident Speculation Tax. A buyer in Vancouver faces the federal prohibition and the British Columbia Foreign Buyers Tax. Legal advice specific to the province of purchase is not optional - it is essential.

Property ownership in Canada involves a range of taxes and fees that apply specifically to non-residents, in addition to the standard costs borne by all buyers.

The federal Non-Resident Speculation Tax and provincial equivalents described above are payable at closing. These are one-time charges calculated as a percentage of the purchase price. Their combined effect can add a significant premium to the acquisition cost.

The federal Underused Housing Tax is a recurring annual tax on residential property owned by certain foreign owners and some Canadian owners. Non-Canadian individuals who own residential property in Canada must file an annual return and, unless an exemption applies, pay the tax. Exemptions exist for properties that are the owner';s primary place of residence, properties rented to arm';s-length tenants for a minimum number of months per year, and properties that are uninhabitable due to disaster or hazard. The filing obligation exists even when no tax is payable, and failure to file attracts significant penalties.

Non-resident sellers of Canadian property are subject to withholding obligations under the Income Tax Act. When a non-resident sells real property, the buyer is required to withhold a portion of the purchase price and remit it to the Canada Revenue Agency unless the seller has obtained a clearance certificate in advance. Obtaining the certificate requires the seller to report the gain and arrange for tax to be paid or secured. This process takes time and should be initiated well before the closing date.

Property transfer taxes - known as land transfer taxes in Ontario and British Columbia, and as registration fees in some other provinces - apply to all buyers regardless of residency. Rates are tiered based on purchase price. Toronto imposes a municipal land transfer tax in addition to the provincial one, effectively doubling the transfer tax burden for Toronto purchases.

Annual property taxes are levied by municipalities and apply to all owners. Some municipalities have introduced vacancy taxes or empty homes taxes that apply when a property is not occupied as a primary residence for a minimum period each year. Vancouver and Toronto both have such taxes, and non-resident owners who leave properties vacant face additional annual charges.

If you are structuring a purchase and want to ensure the tax position is correctly analysed before committing, contact info@vlolawfirm.com. We can help structure the setup correctly the first time.

The purchase process in Canada follows a broadly consistent framework across common law provinces, with Quebec operating under its distinct civil law system.

The first step is confirming eligibility. Before engaging with any property, a foreign buyer must determine whether the federal prohibition applies to them and whether any exemption is available. This requires a review of immigration status, tax filing history and, where a corporate vehicle is involved, the ownership and control structure of that entity.

The second step is financing. Canadian banks and mortgage lenders apply stricter criteria to non-resident borrowers than to Canadian residents. Many lenders require a larger down payment - often significantly higher than the minimum required of residents - and will request evidence of foreign income, credit history and assets. Some foreign buyers fund purchases entirely from offshore funds, which triggers separate anti-money-laundering reporting obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Real estate lawyers and mortgage brokers must report large cash transactions and suspicious activity regardless of the buyer';s nationality.

The third step is engaging a real estate lawyer. In all provinces, a lawyer must be involved in the closing of a real estate transaction. In Quebec, a notary handles the transaction. The lawyer reviews title, arranges title insurance, prepares the transfer documents, calculates and remits applicable taxes, and registers the transfer at the provincial land registry. Foreign buyers should engage counsel early, not only at the closing stage.

The fourth step is the purchase agreement. Offers to purchase are typically made on standard forms prepared by provincial real estate associations. Conditions commonly include financing approval, a satisfactory home inspection and review of condominium documents where applicable. Foreign buyers should ensure that conditions address the specific risks they face, including confirmation of exemption status under the federal prohibition.

The fifth step is closing. On the closing date, funds are transferred, taxes are paid, and the deed or transfer document is registered at the provincial land registry - the Land Title Office in British Columbia, the Land Registry Office in Ontario, or the equivalent body in other provinces. Registration confirms the buyer';s ownership on the public record.

A non-obvious requirement is that foreign buyers must provide their foreign tax identification number and other identifying information as part of the land transfer tax return in Ontario and similar filings in other provinces. Failure to provide this information can delay registration.

Scenario one: a US-based entrepreneur buying a vacation property in British Columbia. A US citizen who does not hold Canadian permanent residence or a work or study permit is caught by the federal prohibition if the property is residential and located in a census metropolitan area. Unless an exemption applies - for example, if the buyer is married to a Canadian citizen and purchases jointly - the purchase of a residential property in Vancouver or Whistler is prohibited. The buyer could, however, purchase commercial property or vacant land zoned for non-residential use without triggering the federal prohibition, though the British Columbia Foreign Buyers Tax may still apply depending on the property type and location. Seeking legal advice before making any offer is essential.

Scenario two: a European investor buying a commercial office building in Toronto. A foreign corporation incorporated outside Canada that wishes to purchase a commercial office building in Toronto is not subject to the federal prohibition, which applies only to residential property. The purchase proceeds under standard commercial real estate rules. The buyer must comply with anti-money-laundering reporting requirements, pay the applicable land transfer taxes (both provincial and municipal in Toronto), and consider the ongoing tax obligations of a non-resident owner, including potential withholding on any future sale. If the investor later converts part of the building to residential use, the analysis changes and the Underused Housing Tax may become relevant.

What is the biggest legal risk a foreign buyer faces when purchasing residential property in Canada?

The most significant risk is purchasing residential property in contravention of the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act. A buyer who completes a prohibited purchase may be convicted of an offence, fined, and face a court-ordered sale of the property. The risk extends to advisers who knowingly assist in a prohibited transaction. Many foreign buyers are unaware that the prohibition exists or assume it does not apply to them because they hold a Canadian bank account or have previously visited Canada. Confirming eligibility before signing any purchase agreement - not after - is the only safe approach.

How much does it cost in taxes and fees to buy property in Canada as a non-resident?

The total tax and fee burden depends on the province, the property type and the buyer';s immigration status. In British Columbia and Ontario, the combination of the standard land transfer tax and the foreign buyer tax can add a substantial percentage of the purchase price to the acquisition cost, beyond the standard transfer taxes that apply to all buyers. In Toronto, the municipal land transfer tax adds a further layer. On top of acquisition costs, non-resident owners face the annual Underused Housing Tax filing obligation and potentially the tax itself, as well as municipal vacancy taxes in cities that have introduced them. Professional fees - legal, accounting and real estate agent commissions - add further to the total. Buyers should budget conservatively and obtain a full cost estimate before committing.

Can a foreign national buy property through a Canadian company to avoid the restrictions?

Using a Canadian-incorporated company does not automatically avoid the federal prohibition or the provincial foreign buyer taxes. The Prohibition on the Purchase of Residential Property by Non-Canadians Act applies to foreign commercial enterprises, which includes Canadian corporations that are controlled by non-Canadians. The Act';s control test looks through the corporate structure to the ultimate beneficial owners. Similarly, British Columbia and Ontario apply their foreign buyer taxes to corporations that are "foreign-controlled," defined by reference to the proportion of shares or voting rights held by foreign nationals. A corporate structure may be appropriate for commercial property acquisitions or for legitimate tax planning purposes, but it must be designed with full awareness of these rules and reviewed by qualified Canadian legal counsel.

Property ownership in Canada is accessible to foreign nationals in many circumstances, but the regulatory environment has become considerably more complex in recent years. The federal prohibition on residential purchases by non-Canadians, combined with provincial foreign buyer taxes, the Underused Housing Tax and municipal vacancy levies, means that a foreign buyer faces a layered set of obligations that vary by province, property type and immigration status. Commercial and industrial property remains broadly accessible. Residential property requires careful analysis of exemptions and applicable taxes before any commitment is made.

VLO Law Firms advises international clients on property ownership matters in Canada. We can assist with eligibility analysis, transaction structuring, tax planning for non-resident owners, and compliance with federal and provincial reporting obligations. To request a consultation, contact: info@vlolawfirm.com