FEDERAL BAN ON FOREIGN INVESTMENT IN CANADIAN REAL ESTATE

Posted on Oct 26, 2022 in Real Estate News

On June 23, 2022, the Canadian federal government passed the Prohibition on the purchase of residential property by non-Canadians Act. Coming into force January 1, 2023, this Act:

Does not apply to Canadian citizens and permanent residents.
Applies to non-Canadians directly or indirectly purchasing residential property in Canada for a period of two years.
Applies to residential property, including detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, condominium units, or other similar premises.
Applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.
Establishes penalties for non-compliance applicable to non-Canadians, as well as any person or entity knowingly assisting a non-Canadian in violating the prohibition.

CREA is currently working with government, provincial associations, and other stakeholders to minimize the impacts of the new rules on the businesses of REALTOR® members, and any related impact on an already slowing housing market. The Government has not yet released regulations, which typically clarify and define terms within the Act. We recently made a number of recommendations to the government as part of a consultation process, which can be reviewed in detail here. CREA’s understanding and interpretation of this legislation may change upon release of the regulations. The legislation may be complicated to interpret, so it’s always a good idea to consult a lawyer for advice or guidance.