On Wednesday, December 21, the federal government released the supporting regulations on the Prohibition on the Purchase of Residential Property by Non-Canadians Act (Foreign Buyers Ban) which includes definitions, exceptions, and enforcement elements to help individuals understand and comply with the law.The Canadian Real Estate Association (CREA) is extremely disappointed by the government’s decision to move forward with this legislation and the rollout of its regulations. Parliamentarians that supported the introduction of this measure need to recognize it will have a detrimental impact on Canada’s reputation, labour market, economy and severely hinder our ability to attract global talent. Our CEO Michael Bourque recently spoke at the Senate Committee on National Finance where he stated why CREA believes this piece of legislation does not address the core of Canada’s housing crisis.
What is the Prohibition on the Purchase of Residential Property by Non-Canadians Act?On June 23, 2022, Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Coming into force Sunday, January 1, 2023, this Act:
- Does not apply to Canadian citizens or permanent residents.
- Applies to non-Canadians directly or indirectly purchasing residential property in Canada for a period of two years.
- Applies to residential property, including 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.
- Applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.
- 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.
What are some of the key elements covered in the regulations?The regulations broadly define the term purchase to include the direct or indirect acquisition of a right or interest in Residential Property. The regulations then specifically exclude, among other things, acquisitions of interests resulting from transitional or life events such as death, divorce, separation, or a gift.Application of Prohibition to Non-Canadian corporations and other entities The term Non-Canadian, as it relates to corporations and other entities, has been defined as:
- an entity not formed pursuant to the laws of Canada or one of its provinces; and
- an entity formed under Canada’s laws that has direct or indirect ownership by a Non-Canadian of 3% or more of the value of the entity’s equity or voting rights.
Article courtesy of CREA. Click here to see the full articlehttps://news2me.crea.ca/2022/december-2022/federal-government-releases-regulations-on-prohibition-on-the-purchase-of-residential-property-by-non-canadians-act/