The Foreign Buyer Ban
In January 2023, Canada implemented the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This federal law restricts foreign purchases of residential property and has been extended through January 1, 2027.
As a US citizen without PR or qualifying work permit, you generally CANNOT purchase residential property in Canada under current law. Violations can result in fines up to $10,000 and forced sale of the property.
Who is Affected
- Non-Canadians: Anyone who is not a citizen or PR
- Foreign corporations: Entities not formed in Canada or controlled by non-Canadians
- Applies to: Residential property (single-family, semi-detached, condo, townhouse)
Key Exemptions
| Category | Can Buy? | Conditions |
|---|---|---|
| Permanent Residents | Yes | No restrictions |
| Work Permit Holders | Yes | 183+ days validity remaining, only 1 property |
| International Students | Limited | Must meet specific criteria, price cap $500K |
| Refugees/Protected Persons | Yes | No restrictions |
| Spouse of Citizen/PR | Yes | Can buy jointly with Canadian spouse |
| Diplomatic/Consular | Yes | Accredited only |
If you hold a valid TN work permit with at least 183 days remaining, you qualify for the work permit exemption and can purchase ONE residential property for your own use. This is a key advantage for Americans working in Canada.
Provincial Foreign Buyer Taxes
Beyond the federal ban, several provinces impose additional taxes on foreign buyers even when purchases are permitted under exemptions.
BC Foreign Buyer Tax
- Rate: 20% of purchase price
- Areas: Greater Vancouver, Fraser Valley, Victoria, Nanaimo, Central Okanagan
- Exemptions: PRs, provincial nominees, some work permit holders
- Work permit exemption: Must be working in BC
Ontario Non-Resident Speculation Tax (NRST)
- Rate: 25% of purchase price
- Areas: Province-wide
- Exemptions: PRs, provincial nominees, refugees
- Work permit holders: Can apply for rebate if they become PR within 4 years
On a $1 million Toronto home, the Ontario NRST alone is $250,000—on top of regular land transfer taxes. These taxes make buying as a non-resident economically impractical in most cases.
Other Provincial Rules
| Province | Foreign Buyer Tax | Notes |
|---|---|---|
| Quebec | None (provincial) | Federal ban still applies |
| Alberta | None | Federal ban still applies |
| Manitoba | None | Federal ban still applies |
| Atlantic Provinces | None | Generally more accessible (federal ban still applies) |
| PEI | Land restrictions | Non-residents limited to 5 acres |
What Americans CAN Buy
Despite restrictions on residential property, several property types remain accessible to US citizens.
Exempt Property Types
- Recreational property: Cottages outside census areas (check specific location)
- Commercial property: Office, retail, industrial—no restrictions
- Multi-unit residential: Buildings with 4+ units may be exempt
- Agricultural land: Generally not covered by ban
- Vacant land: Depends on zoning and location
The federal ban applies to "census agglomerations" and "census metropolitan areas" with populations over 100,000. Rural and small-town properties may be exempt. However, determining whether a specific property falls within a covered area requires careful research.
The Cottage Exception
Many Americans with ties to Canada are interested in recreational properties. If the property is located outside a covered census area (typically means rural/cottage country), the federal ban may not apply. However:
- Always verify the specific location's status before offering
- Provincial taxes may still apply in BC and Ontario
- Mortgage options are limited for non-residents
- Property must be genuinely recreational, not primary residence
Mortgages for Americans
Even when you can legally buy, financing Canadian property as a non-resident US citizen presents challenges.
Non-Resident Mortgage Options
- Major banks: Most won't lend to non-residents
- Some credit unions: May have programs for US buyers
- Private lenders: Higher rates (8-12%), lower LTV (50-65%)
- Cross-border banks: RBC, TD, BMO have US operations but policies vary
Typical Non-Resident Terms
| Factor | Resident | Non-Resident |
|---|---|---|
| Down Payment | 5-20% | 35-50% |
| Interest Rate | Market rate | Market + 0.5-2% |
| Amortization | Up to 25-30 years | Often limited to 15-20 years |
| Documentation | Standard | Extensive (US tax returns, credit report, etc.) |
Your mortgage payments will be in CAD. If the Canadian dollar strengthens against the USD, your effective payment increases. Some US-based cross-border lenders offer USD mortgages, but these are rare and come with their own complexities.
The Buying Process
If you qualify to buy under an exemption, here's the typical Canadian home buying process.
Step-by-Step Process
- Get pre-approved: Know your budget before shopping
- Find a realtor: Buyer's agents are typically paid by seller
- Search and view: MLS is the main listing system (realtor.ca)
- Make an offer: Written offer with conditions (financing, inspection)
- Negotiate: Back and forth until accepted or rejected
- Deposit: Typically 5% upon acceptance, held in trust
- Due diligence: Home inspection, financing, title search
- Waive conditions: Remove conditions once satisfied
- Closing: Transfer funds, receive keys (lawyer handles)
Key Differences from US
- Cooling-off periods: Not standard (once you waive conditions, you're committed)
- Buyer agent fees: Usually paid by seller, but changing in some areas
- Title insurance: Common but not always mandatory
- Land transfer tax: Paid by buyer at closing (varies by province)
- No federal mortgage interest deduction: Unlike US, mortgage interest isn't tax deductible in Canada
Closing Costs
Budget 3-5% of purchase price for closing costs beyond the down payment.
Typical Closing Costs
| Cost | Typical Range | Notes |
|---|---|---|
| Land Transfer Tax | 1-4% of price | Varies by province, Toronto has municipal LTT too |
| Legal Fees | $1,000-$2,500 | Lawyer required for closing |
| Title Insurance | $300-$500 | One-time premium |
| Home Inspection | $400-$700 | Highly recommended |
| Appraisal | $300-$500 | If required by lender |
| Property Tax Adjustment | Varies | Reimburse seller for prepaid taxes |
| Foreign Buyer Tax | 20-25% | BC and Ontario, if applicable |
Land Transfer Tax Examples
| Province | On $500K Property | On $1M Property |
|---|---|---|
| Ontario | $6,475 | $16,475 |
| Toronto (City + Province) | $12,950 | $32,950 |
| BC | $8,000 | $18,000 |
| Alberta | $0 | $0 |
| Quebec | ~$5,250 | ~$12,500 |
Ongoing Property Costs
Property Taxes
- Paid annually to municipality
- Rates vary significantly by city (0.5-1.5% of assessed value typical)
- Vancouver and Toronto have relatively low rates despite high prices
- Assessment may differ from market value
Other Ongoing Costs
- Condo fees: $300-$1,000+/month depending on building
- Home insurance: $1,000-$3,000/year
- Utilities: $150-$400/month (varies by region)
- Maintenance: Budget 1-2% of value annually
Vancouver and some other cities impose taxes on empty homes. If you buy property but don't rent it out or live in it, you may face annual taxes of 1-3% of assessed value. These are designed to discourage foreign investment buyers from leaving properties vacant.
US Tax Implications
As a US citizen, your Canadian property has US tax consequences.
Key Considerations
- FBAR reporting: Canadian bank accounts holding proceeds must be reported
- No mortgage interest deduction: If not your primary residence (and even then, limited)
- Rental income: Taxable in both countries (credits available)
- Capital gains: Taxable in both countries on sale
- Primary residence exclusion: May not apply to foreign property
- Currency gains: Can create additional US tax liability
Canadian real estate for US citizens creates complex tax situations. The interaction of Canadian departure tax, US FIRPTA-like rules, currency gains, and treaty provisions requires professional advice before buying.