Buying without PR: bans and extra taxes

Buying a home as a non-resident in Canada is tightly restricted by federal law and subject to additional provincial taxes in key markets. If you are an immigrant, international student, or temporary worker planning to purchase a home, it's essential to understand these rules before making an offer, as violations carry steep financial penalties and the property may be forced to sale.

The Federal Ban on Non-Resident Purchases

The Prohibition on the Purchase of Residential Property by Non-Canadians Act prevents foreign nationals, non-permanent residents, and foreign-controlled corporations from buying most homes in Canada. The ban applies to residential property (buildings with three dwelling units or fewer) located in Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs) — essentially all major cities and towns across Canada. The law came into force on January 1, 2023, and was extended on February 4, 2024, to remain in effect until January 1, 2027.

What the Ban Covers

The ban applies to detached homes, semi-detached houses, townhouses, and condominiums — anything described as a dwelling unit with private kitchen, bathroom, and living space. It does not restrict purchases of commercial properties, multi-unit buildings (four or more units), or recreational properties such as cottages and vacation homes. Vacant land zoned for residential or mixed-use development is also exempt.

Penalties for Violation

Anyone who violates the ban faces a $10,000 fine. Additionally, courts can order the forced sale of a property purchased in violation of the Act, even years after closing. Assisting a non-Canadian to breach the law can also result in the same $10,000 penalty.

Who Can Qualify for Exemptions?

The federal government recognizes that many temporary residents contribute to the economy and intend to settle in Canada. Several exemptions allow non-Canadians to purchase one residential property under specific conditions.

Work Permit Holders

If you hold a valid work permit (whether open or employer-specific), you can purchase one residential property to live in, provided your work permit has at least 183 days of validity remaining on the date you sign the purchase agreement. You do not need to prove a certain number of years worked or file tax returns — the 183-day threshold is the primary requirement.

International Students and Study Permit Holders

Study permit holders can purchase one residential property if they meet stricter conditions. You must satisfy at least one of the following: file all required income tax returns for each of the five taxation years before the purchase; have been physically present in Canada for at least 244 days in each of those five calendar years; or purchase a property priced at no more than $500,000 CAD. The $500,000 price cap is significantly lower than average home prices in major markets like Toronto and Vancouver.

Other Eligible Groups

Spouses or common-law partners of Canadian citizens and permanent residents can purchase property jointly with their eligible partner. Protected refugees, diplomats, and certain individuals registered under the Indian Act may also be exempt. A non-Canadian whose spouse or partner is a Canadian citizen or permanent resident does not need to pay Ontario's or other provincial foreign buyer taxes if both are listed as joint transferees and certify the property will be your primary residence within 60 days of closing.

Provincial Foreign Buyer Taxes

Even if you qualify for an exemption to the federal ban, Ontario and British Columbia impose additional provincial taxes on foreign buyers. These are separate from the federal rule and apply regardless of your exemption status.

Ontario Non-Resident Speculation Tax (NRST)

Ontario levies a 25% Non-Resident Speculation Tax on the purchase price of any residential property (one to six units) bought by foreign nationals anywhere in the province. Starting January 1, 2025, the City of Toronto added a 10% Municipal Non-Resident Speculation Tax on top of the provincial rate, bringing the combined provincial and municipal tax to 35% for Toronto properties. This is paid on closing day alongside the standard land transfer tax.

Example: If you buy a $500,000 home in Toronto as a foreign national, you would owe $175,000 in combined NRST taxes (25% provincial + 10% municipal) plus the applicable land transfer tax and legal fees — significantly increasing your total closing costs.

British Columbia Additional Property Transfer Tax

British Columbia imposes a 20% Additional Property Transfer Tax on foreign buyers purchasing residential property in designated regions, including Metro Vancouver, the Okanagan, and Nanaimo. This tax applies to the fair market value of the property and is calculated based on your proportionate share if you purchase jointly.

Other Provinces

Nova Scotia doubled its non-resident deed transfer tax to 10% in April 2025, applying it to all non-Nova Scotia residents (not just foreign nationals). Most other provinces, including Alberta, currently have no equivalent foreign buyer tax.

The Underused Housing Tax (UHT)

If you own residential property in Canada as a foreign national, you must pay an annual federal Underused Housing Tax (UHT) of 1% on the property's value. This tax applies to residential properties that are vacant or underused — meaning they are not occupied by you or your family members for at least 180 days in a calendar year.

Who Must File

As an affected owner (a foreign national or certain Canadian entities and trusts owning residential property), you must file an annual Underused Housing Tax Return with the Canada Revenue Agency (CRA) using Form UHT-2900 by April 30 of the following calendar year. You must file even if you qualify for an exemption, such as using the property as your principal residence or renting it long-term at fair market rent.

Exemptions

You do not owe the 1% tax if the property is occupied for at least 180 days per calendar year by you, your spouse, your children, or other family members. Long-term rentals at fair rent also qualify for exemption. The exemption does not apply to short-term rentals such as Airbnb listings.

CRA Account Requirements and Penalties

To file, you need a valid CRA tax identification number, even if claiming an exemption. As of 2024, late-filing penalties start at $1,000 for individuals and $2,000 for corporations (reduced from earlier penalties of $5,000 and $10,000). If you fail to file for multiple years, penalties and interest accumulate quickly, and the CRA may assess the full 1% tax automatically without giving exemption credit.

Key Steps Before You Make an Offer

1. Confirm your immigration status. You must be a permanent resident, Canadian citizen, or qualify for a specific exemption (work permit with 183+ days, study permit meeting conditions, refugee status, or spouse of a Canadian citizen/PR).
2. Check the property location. Verify whether it falls within a CMA or CA using Statistics Canada mapping tools. If outside these areas, the federal ban may not apply, but provincial taxes might still.
3. Research provincial and municipal taxes. Visit ontario.ca, gov.bc.ca, or your province's official site to confirm current foreign buyer tax rates and any exemptions.
4. Apply for a CRA tax ID number early if you are a foreign national. You will need this for the UHT annual return and other tax filings.
5. Consult a real estate lawyer. Verify your exemption status in writing before signing any purchase agreement. A single mistake can invalidate the exemption and expose you to fines and forced sale.
6. Calculate total closing costs. Include the purchase price, provincial and municipal foreign buyer taxes (if applicable), land transfer tax, legal fees, inspection, and appraisal. This often adds 30–40% to the property price for foreign buyers in high-tax jurisdictions.

Staying Informed as Rules Change

Housing policy in Canada changes frequently. The federal ban is currently set to expire January 1, 2027, but may be extended, narrowed, or replaced with new rules. Provincial and municipal governments continue to adjust their foreign buyer taxes and vacancy taxes. Before signing a purchase agreement, verify the current status on official government websites: canada.ca for federal rules, your provincial government site (e.g., ontario.ca, gov.bc.ca) for provincial taxes, and your city's website for municipal taxes.

Consider using settlement services and real estate legal professionals who specialize in non-resident transactions. Organizations like Settlement.org provide guides and resources for newcomers navigating Canadian housing rules, and reputable real estate lawyers can review your exemption status and protect you from costly mistakes.