The Non-Canadian Act talks about the purchase of a Canadian home for non-Canadians and emphasizes the restriction on buying a residential property. The Act mainly prohibits foreign investors without Canadian citizenship or permanent residency. This Act came into existence on June 2022 and was executed on January 1, 2023.
Overall, the new regulations restrict foreign investors from purchasing a residential property. Also, such an obligation is likely to last for two years, and after that, it will be canceled by default.
Non-Canadian Act
Moreover, the Non-Canadian Act implies that non-Canadians or non-permanent residents, and foreign commercial enterprises will not have permission to acquire Canadian residential or non-recreational property.
Additionally, non-residential property implies rowhouse units, detached and semi-detached houses, residential condominium units, and other buildings.
Over the past few years, Canadian property cost has reached heights, and the government had to introduce a strategy to reduce this cost. Hence, the Canadian government brought forth this Act as part of the budget 2022.
The Canadian Real Estate Association presented through its data that the average cost of a house peaked at $816,720 in February 2022. However, in November 2022, the cost declined to $632,802. Since the average income of Canadians was around $58,800 in 2021, even after this reduction, the cost is relatively higher. Hence, owning a home becomes practically impossible.
Also, the government noticed foreign investors purchasing Canadian homes without even residing in them. Hence, the government found this as the reason behind the increased prices of residential houses.
Exceptions to purchasing a Canadian home- Non-Canadian Act
The new Act in no way entirely restricts foreign investors from purchasing properties. Moreover, they still have the opportunity to buy a recreational property, including vacation houses and cottages. Additionally, properties having three individual units are seen to be exceptions too.
However, according to the Act, homes apart from the Census Metropolitan areas, having a population of more than 100,000 are excluded from this.
Other exceptional cases include non-Canadians who buy a house with a Canadian Common-law partner or a spouse, who might get into unexpected situations like a divorce, or a non-Canadian who owns a house through inheritance (after a death).
Purchasing a Canadian home for temporary residents
The Non-Canadian Act isn’t applicable to non-Canadians and those without permanent residence in Canada. However, temporary residents, who are also holders of a valid work or study permit, do have the eligibility to buy a home in Canada.
Additionally, temporary residents also need to fulfill certain conditions because the Canadian government checks the intent before providing individuals with permanent residency.
For instance, an individual under an authorized study program in a Canadian Designated Learning Institution will need to fulfill at least one of the following requirements:
- Filing of all income tax returns aligning with the Income Tax Act every five years (of taxation) following the year the person purchased the property.
- Marking their physical presence in Canada for at least 244 days every five Calendar years following the year the purchase took place.
- The cost of residential purchase must not exceed $500,000.
- They have not bought more than one residential property.
The above regulations imply that any study permit holder in Canada who seeks to purchase a home will require to demonstrate that they resided in the country for 244 days every year in the previous five years before buying the home. Additionally, they must present proof of filing income tax returns in this country during their stay.
Essentially, it is worth noting that to buy a home in British Columbia and Ontario, $500,000 will not be sufficient. Moreover, the housing price in these provinces exceeds $800,000.
Conditions for work permit holders for buying a home in Canada
Canada’s work permit holders will need to fulfill specific conditions, while they purchase a home. They’re as follows:
- They have at least a three-year Canadian work experience within the four years following the year the purchase occurred. However, this is in the case of full-time work per the IRPA’s 73(1) subsection.
- Having filed all income tax returns under the Income Tax Act for the period of three to four taxation years. However, these years must follow the year of purchase.
- Not bought multiple residential properties.
Comparatively, the work permit holders must demonstrate their full-time experience of three years. Also, they will also require to show tax returns following the four years.
On the other hand, temporary residents must have all eligibility proofs in the form of work permit documents and assessment notices.
Furthermore, they will require to present documents related to their physical presence in Canada. They can present their utility bills, rental agreements, and Canadian entry and exit records.
An illegal purchase will end up with a penalty
Lastly, foreign investors who illegally purchase a prohibited Canadian residential property will be liable to pay a penalty of $10,000. Besides this, the provincial court might order them to sell out the property, and this comes under the category of a criminal offense.
