Canada Foreign Buyers Ban: Amendments and Exceptions

Two Gates, Not One Ban

Canada still has a federal prohibition on non-Canadians buying residential property. It has been in force since January 1, 2023. It is currently set to expire on January 1, 2027. The statute is the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

That is gate one. Gate two is tax. Ontario's Non-Resident Speculation Tax is 25% of the value of the consideration, anywhere in the province. The City of Toronto adds a 10% municipal NRST on top. Passing a federal exception does not wipe the tax. A work-permit holder who is allowed to buy still pays NRST unless a separate Ontario exemption applies.

On a Toronto purchase those taxes sit on top of ordinary land transfer tax. Confirm eligibility before the offer is firm. The lawyer cannot register a transfer that the Act forbids.

NRST is a tax. The prohibition is a ban. A Toronto real estate lawyer checks both before the offer is firm.

Selling is a third statute. A non-resident vendor of a Canadian house needs a section 116 clearance certificate, or the buyer withholds 25 percent of the price (50 percent if the property is inventory or depreciable). That is federal income tax collection on the way out, not NRST and not the ban.

Who the Ban Catches

A non-Canadian is anyone who is not a Canadian citizen, a permanent resident, or a person registered as an Indian under the Indian Act. Foreign corporations and privately held Canadian corporations controlled by non-Canadians are in the same bucket. Control, after the March 2023 amendments, is 10% of equity or voting rights, or control in fact.

The ban applies to residential property: a house, a semi, a townhouse, a condo, or a building with three dwelling units or fewer. A building with four or more units is outside the prohibition. Vacant land zoned residential or mixed-use is also outside it, after the same 2023 amendments. Recreational property outside a census metropolitan area or census agglomeration is prescribed out. Toronto, Mississauga, Vaughan, Markham, and the rest of the GTA are inside a CMA. Cottage country often is not. Check the Statistics Canada 2021 map, not a listing description.

Who Can Still Buy

Citizens, permanent residents, and persons registered under the Indian Act are not in the prohibition. Everyone else needs an exception in the Act or the regulations.

A work-permit holder (or a person authorized to work under IRPR s. 186) may buy if, on the purchase date, 183 days or more remain on the permit, and they have not already purchased another residential property under the Act. That is the current worker test. The old tax-filing and price-cap conditions for workers were repealed in March 2023.

A student at a designated learning institution has a much tighter test: required tax returns for each of the five preceding taxation years, physically present in Canada at least 244 days in each of those five calendar years, a purchase price of $500,000 or less, and not more than one residential property. Most international students do not meet it. Do not treat a study permit as a licence to buy a Toronto condo.

Protected persons, certain people granted a safe-haven temporary status, diplomats, and refugee claimants whose claim has been referred to the Refugee Protection Division, are prescribed out. A non-Canadian buying with a spouse or common-law partner who is a citizen, permanent resident, Indian Act registrant, qualifying temporary resident, or protected person is also excepted.

Death, divorce, separation, and a gift are not a "purchase" for the Act. Neither is a rental to a tenant, the exercise of a security interest, a transfer under a trust created before the Act, or an acquisition for development. An agreement of purchase and sale that was binding before January 1, 2023 is also out.

What Happens If Someone Buys Anyway

Contravening the prohibition is an offence. The fine is up to $10,000. The superior court can also order a sale. On that sale the non-Canadian does not keep the upside. Costs, other entitled parties, then repayment of no more than the purchase price, then anything left to the Receiver General. Counselling or aiding a prohibited purchase is in the same offence section.

NRST Is a Different Statute

Ontario charges 25% NRST on designated land anywhere in the province when any transferee is a foreign national, a foreign corporation, or a taxable trustee. Designated land is land with one to six single-family residences, including a condo unit. It is not prorated to the foreign buyer's share. One foreign name on title, even at 1%, puts 25% on the whole price. Every transferee is jointly liable, including the Canadian co-buyer.

Toronto's municipal NRST is an extra 10% on certain residential purchases in the city, in force since January 1, 2025. See the City of Toronto rates page. Neither tax is the federal ban. Neither is ordinary land transfer tax.

NRST exemptions are narrower than the federal exceptions. Ontario currently lists nominees under the Ontario Immigrant Nominee Program, protected persons, and certain spouses of citizens, permanent residents, nominees, or protected persons, on registered transfers, if the occupancy tests on the exemptions page are met. A work permit is not an NRST exemption. A student permit is not an NRST exemption. The old student and foreign-worker rebates are closed.

If you become a permanent resident after closing, Ontario still has a permanent-resident NRST rebate, with occupancy and title conditions, if you become a PR within four years of registration. That is a rebate after you paid, not a reason to skip the tax on closing.

On an Ontario file the lawyer checks the federal prohibition first, then NRST, then Toronto's municipal layer, then ordinary land transfer tax. All-inclusive legal fees on a residential purchase start at $2,299 plus HST. The speculation taxes, if they apply, are a different line and they are usually the largest.

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