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Foreign Ownership in Canmore

Foreign Ownership Rules in Canmore

In the 2022 Federal Budget, the Government of Canada has proposed a ban on foreign buyers for certain types of real estate in Canada. The are a number of proposed exceptions which will have some impact on the Canmore real estate market. The below are from CMHC, Stats Canada, and EY with regards to foreign ownership. The notable exception is that Canmore would be considered a recreational property market and exempt from the new regulations. In addition, the underused housing tax exemption would apply to Canmore properties as long as they are used by the owners at least four week a year and / or are in an area with a population of less than 30,000.

Note, this blog was written in September 2022 and the regulations are subject to change. Any foreign buyer or non-resident should speak both with their accountant and real estate lawyer.

https://www.cmhc-schl.gc.ca/en/media-newsroom/notices/2022/thoughts-ban-non-canadians-buying-real-estate

When will the prohibition on the purchase of residential property by non-Canadians come into force?

  • The legislation to implement the prohibition, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, will come into force on January 1, 2023.
  • The Government intends for the legislation and the supporting regulations to come into force together. The final regulations are intended to be published later this fall.

Who does prohibition on the purchase of residential property by non-Canadians apply to?

  • The prohibition applies to non-Canadians directly or indirectly purchasing residential property in Canada for a period of 2 years.
  • Canadian citizens and permanent residents, for example, are not subject to the prohibition.

Who is exempt from the prohibition on the purchase of residential property by non-Canadians?

  • The Government is proposing to provide or to clarify existing legislative exceptions in the regulations for the following groups of people:
    • Indigenous peoples;
    • International students on the path to permanent residency;
    • Individuals with work permits residing in Canada;
    • Individuals fleeing international crises and other vulnerable populations; and
    • Accredited members of foreign missions in Canada.

Does the prohibition on the purchase of residential property by non-Canadians apply to purchases made through corporations?

  • The prohibition applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.

What types of residential property are exempt from the prohibition on the purchase of residential property by non-Canadians?

  • The prohibition applies to residential property, which includes 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.
  • The Government intends to exclude recreational properties from the prohibition. As such, the Government is proposing to provide an exception in the regulations for any residential property located outside of a Census Metropolitan Area or Census Agglomeration. See Definition Below
  • The Government is proposing to apply the prohibition to vacant land, only where the land has been zoned for residential use or mixed use by municipal authorities and is within a Census Metropolitan Area or Census Agglomeration.

What happens if a non-Canadian violates the prohibition on the purchase of residential property by non-Canadians?

  • The legislation 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.
  • A non-Canadian that violates the prohibition, or any person or entity that knowingly assists a non-Canadian in violating the prohibition, is guilty of an offence and liable  to a fine of up to $10,000 if convicted.
  • If a non-Canadian is convicted of violating the prohibition, the responsible Minister may apply to the applicable provincial court for a judicial sale order.
  • The legislation requires the regulations to provide that any court-ordered sale will result in the non-Canadian receiving no more than the price paid to purchase the residential property.

Do third parties, like realtors or lawyers, have a role in enforcing the prohibition on the purchase of residential property by non-Canadians?

  • As part of their professional duties, realtors, lawyers and notaries owe their clients an obligation to inform.
  • The legislation does not rely on these professionals to enforce the prohibition. It nonetheless allows for penalties to be imposed on any party found guilty of knowingly assisting a non-Canadian in violating the prohibition.

https://www150.statcan.gc.ca/n1/pub/92-195-x/2011001/geo/cma-rmr/def-eng.htm

Census metropolitan area/census agglomeration 

The Census Metropolitan Area and Census Agglomeration Boundary Files portray the boundaries of the census metropolitan areas and census agglomerations for which census data are disseminated. Census metropolitan areas and census agglomerations consist of one or more adjacent municipalities (census subdivisions) around a core. To form a census metropolitan area, the core must have a population of at least 50,000 and the entire census metropolitan area must have a total population of at least 100,000. To form a census agglomeration, the core must have a population of at least 10,000. The files contain the boundaries of all census metropolitan areas and census agglomerations defined for the census. Census metropolitan areas and census agglomerations crossing provincial boundaries appear in the boundary files in provincial parts. 

Underuse Housing Tax Exemptions

Vacation/recreational properties

The tax does not apply to a residential property if it is located in a prescribed area and any prescribed conditions are met.

As part of the federal economic and fiscal update tabled on 14 December 2021, the Government indicated it would provide an exemption for vacation and recreational properties. This exemption would apply to a property that is:

  • Located in an area of Canada that is not an urban area within either a census metropolitan area or a census agglomeration having 30,000 or more residents.
  • Used personally by the owner (or the owner’s spouse or common-law partner) for at least four weeks in the calendar year.

However, the details of this exemption have not yet been confirmed by regulation.

https://www.ey.com/en_gl/tax-alerts/canada-s-new-underused-housing-tax-act-receives-royal-assent

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