Buying Real Estate in BC or Canada as a Foreign National or Non Resident

Are you considering purchasing Real Estate in BC as a foreign national or non resident?  Are you a Trump Refugee looking to escape the new political realities of the US.  We are getting many inquiries from US citizens these days who are looking to relocate into Canada without awareness of the restrictions imposed by the Canadian government on the purchase of real estate by foreign nationals in consequence of the Canadian housing shortage. The Canadian government has taken several initiatives to severely restrict access to Canadian Real Estate to anyone without citizenship or permanent resident status.   If you do have status in Canada but are not a resident of Canada for tax purposes there are also tax issues to consider, such as restrictions on the availability of financing on your purchase, and withholding tax provisions when you sell, but as a non resident with status you are otherwise free to purchase.   

Aside from financing and withholding tax considerations, the following three items that will have an impact on foreigners trying to buy real estate in BC, are the massive BC property transfer tax surcharge that applies to non citizens trying to buy Real Estate in Canada, the federal Foreign Buyers's Ban, and border crossing and access restrictions that apply to non citizens.  

These restrictions apply primarily in high density geographic areas with significant servicing, or areas that are typically attractive to retirees.  Real Estate, homes, and properties located in more rural areas tend to be available to foreign buyers for purchase, as described in detail below.   

The BC Property Transfer Tax Surcharge:

In British Columbia, foreign nationals purchasing property in certain designated areas are required to pay an additional foreign buyer property tax on their proportionate share of the property's fair market value. The proportionate share refers to the percentage of interest the individual holds in the property, as registered with the Land Title Office.

The Foreign Buyers Ban

In June 2022, Canada’s parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which was set to take effect on January 1, 2023. The law was introduced to address concerns that Canadian buyers were being priced out of the housing market by foreign investors. It banned foreign nationals—defined as individuals who are neither Canadian citizens nor permanent residents—from purchasing residential properties in Canada, both directly and indirectly. This policy was a direct response to growing worries about the impact of foreign investments on local housing markets.

By February 2024, however, the federal government announced that this ban would be extended for an additional two years. Chrystia Freeland, the Deputy Prime Minister and Minister of Finance, confirmed that the ban, which was set to expire on January 1, 2025, would now be in place until January 1, 2027. This extension aimed to ensure that housing remained accessible to Canadian families rather than becoming a speculative asset for investors from outside the country. Freeland emphasized that the government was determined to make housing more affordable for Canadians across the nation.

While the ban restricted foreign ownership of residential properties, the government did allow certain exceptions, particularly for non-Canadians who were living or working in Canada. On March 27, 2023, Ahmed Hussen, the Minister of Housing and Diversity and Inclusion, announced amendments to the regulations accompanying the act. These amendments introduced conditions under which foreign nationals could purchase residential property, specifically those holding work permits or studying in Canada.

To be eligible for a home purchase, foreign workers needed to have at least 183 days of validity left on their work permit at the time of purchase and could not own more than one property in Canada. For international students, the rules were more stringent. They had to meet a number of criteria, including filing tax returns for the previous five years, being physically present in Canada for at least 244 days each year during that period, and ensuring the property they were buying did not exceed $500,000 in value.

Geographic Exemptions

Foreign nationsl may still purchase Real Estate in Canada providing it falls outside of a Census Metropolitan Area (CMA) or a Census Agglomeration (CA).

To determine whether a property is located within a Census Metropolitan Area (CMA) or a Census Agglomeration (CA), you can use the map tool on the website by entering the property address.

CMA and CA Tool:

Here’s a quick rundown of the criteria:

• Census Metropolitan Areas (CMA): These areas must have a population of at least 100,000, with at least 50,000 people living in the core.
• Census Agglomerations (CA): These areas must have a population of at least 10,000.

For properties outside these areas, non-Canadians are allowed to purchase residential properties, as long as the property doesn't fall within these population criteria. There are some exceptions that may allow non-Canadians to purchase residential properties in CMAs or CAs.

The Act classifies residential property as buildings containing up to three dwelling units, including semi-detached houses and condominium units. However, it does not restrict the purchase of larger buildings with four or more units.

If a non-Canadian purchases a property in violation of this rule, they face potential fines of up to $10,000 and could be required to sell the property, as per the legal framework.

Despite these amendments, foreign nationals in certain provinces were still subject to additional taxes. Both Ontario and British Columbia imposed a Non-Resident Speculation Tax (NRST), also known as the Foreign Buyer’s Tax, targeting non-residents purchasing properties in designated areas. In Ontario, the tax rate was 25%, while in British Columbia, it stood at 20%. This tax aimed to limit foreign influence on the local housing market and ensure that housing remained affordable for residents.

In Ontario, the NRST applied to any residential property purchased by a foreign national. It was added on top of the general Land Transfer Tax. If a foreign national bought property with a Canadian citizen or permanent resident, the NRST applied to the full purchase price, not just their share, and each buyer was responsible for paying their portion of the tax.

However, there were provisions for those who paid the NRST to receive a rebate under certain circumstances. If a foreign national who paid the NRST later became a permanent resident of Canada, they could apply for a Permanent Resident of Canada NRST Rebate. To qualify for the rebate, they had to meet specific conditions, including becoming a permanent resident within four years of purchasing the property and living in the property as their principal residence. The entire NRST amount paid would be refunded if these conditions were met.

Applications for the rebate had to be submitted within 90 days of becoming a permanent resident, and it was essential that applicants provided proof of their status, such as a Confirmation of Permanent Residence document or a letter from Immigration, Refugees and Citizenship Canada (IRCC) confirming their status.

Further exemptions were available for foreign nationals who were nominated under the Ontario Immigrant Nominee Program (OINP). If a foreign national held an OINP certificate at the time of purchase, they could be exempt from the NRST, provided they were in the process of applying for permanent residency and met specific residency conditions.

This comprehensive regulatory framework reflected Canada’s strategy to safeguard its housing market from speculative foreign investment while accommodating temporary residents who contribute to the country's economy.

Getting Citizenship or Permanent Residency Status in Canada

If you end up buying property despite of the onerous restrictions in Canada as a foreign national, it s important to remember that you can not stay in Canada for more than six months without having status in Canada.   You can leave Canada and come back right away a few times, but you can not "flagpole, meaning coming and going repeatedly without the risk of being banned from entering altogehter, in which case you will no longer have access to the property you have purchased in Canada.  

Obtaining citizenship in Canada or Permanent residency status is also not an easy process.  It takes about two years to obtain permanent residency as a first step towards citizenship.  Skilled workers who can contribute to the Canadian economy are generlly preferred.   Older applicants are less welcome due to the strain they potentially present to Canada's underfunded, inefficient, and severely strained medical system.   You can purchase a business under the various business succession programs that are available in Canada but this is also a difficult process. Many Canadian want to retire from theri businesses and there are not enough Canadian who wish to buy them.  You musst be able to demonstrata that you can operate the business you are buying.  Businesses in Canada are typically not as profitable as they are in the United States.  

In other words, it is not as easy as hopping the US Mexican border if you want to remain in Canada.  Most Americans especially are startled when they come to terms with the process and most end up abandoning their plans.  

Canada’s Immigration Levels Plan for 2025 targets 395,000 new immigrants, a significant but slightly reduced number compared to previous years. Contrary to rumors of a freeze on immigration, Canada remains open to newcomers, making it a prime destination for candidates worldwide.