Mistakes, Disputes and Official Sources
Foreign buyer ban and non-resident taxes in Canada: what applies in 2026
Who the federal ban on non-Canadian home buyers covers, its exceptions and end date, plus Ontario's NRST, Toronto's MNRST, BC's additional transfer tax and rules for non-resident sellers.
Since 1 January 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act has barred most people who are not Canadian citizens or permanent residents, and most foreign-controlled companies, from buying residential property in Canada's census metropolitan areas and census agglomerations. The ban was extended in 2024 to 1 January 2027. Exceptions exist for some work permit holders, refugees and protected persons, diplomats and others. On top of the ban, Ontario charges a 25% Non-Resident Speculation Tax, Toronto a 10% Municipal Non-Resident Speculation Tax since 2025, and BC an additional property transfer tax in specified areas. A non-resident seller faces a separate rule: without a CRA clearance certificate, the buyer withholds 25% of the price.
This guide is part of Mistakes, Disputes and Official Sources. It is general information; anyone affected should get legal advice before signing.
The federal ban: who and what it covers
| Point | Rule |
|---|---|
| Who is a "non-Canadian" | An individual who is not a Canadian citizen, a permanent resident or a person registered under the Indian Act; also corporations and entities controlled by non-Canadians (above a set control threshold), and some foreign entities |
| What property | Residential property: buildings with no more than three dwelling units, and parts of buildings such as semi-detached homes, row houses and condo units |
| Where | Census metropolitan areas and census agglomerations, as defined by Statistics Canada; rural areas and small towns outside them are not covered |
| Penalty | Fine of up to $10,000 for the buyer and anyone who knowingly helps; a court may order the property sold |
| Period | In force since 1 January 2023; extended to 1 January 2027 |
Exceptions in the Act and its regulations include, among others:
- temporary residents who meet the conditions for work permit holders or students set in the regulations;
- refugees and protected persons;
- accredited diplomats and certain international organisation staff;
- acquisitions on death, divorce or separation, or by gift;
- a non-Canadian spouse or common-law partner buying with a Canadian citizen or permanent resident;
- acquisitions for development, under the 2023 amendments.
The regulations were amended in March 2023 to narrow the ban's effect on development and on companies; check the current text on the Justice Laws website.
Provincial and city non-resident taxes
These apply in addition to normal land transfer tax and in addition to the federal ban, which means they mainly affect buyers who fall within an exception to the ban, or property outside the restricted areas.
| Tax | Where | Rate | Notes |
|---|---|---|---|
| Non-Resident Speculation Tax (NRST) | All of Ontario | 25% of the value | Since 25 October 2022; applies to foreign nationals, foreign corporations and taxable trustees; rebates in limited cases |
| Municipal Non-Resident Speculation Tax (MNRST) | City of Toronto | 10% | Since 1 January 2025, on top of MLTT and NRST |
| Additional property transfer tax | Specified areas of BC | 20% of fair market value of the residential part | For foreign nationals, foreign corporations and taxable trustees |
| Speculation and vacancy tax | Designated areas of BC | Annual | Higher rate for foreign owners and satellite families; annual declaration |
Illustrative example. A foreign national with an eligible work permit buys a $700,000 condo in Toronto. Ontario LTT $10,475 + MLTT $10,475 + NRST 25% x $700,000 = $175,000 + MNRST 10% x $700,000 = $70,000. Total: $265,950, before any rebate available if the buyer later becomes a permanent resident within the time limits.
Non-resident sellers: section 116
If the seller is not a resident of Canada for tax purposes, section 116 of the Income Tax Act applies:
- The seller should apply to the CRA for a certificate of compliance, usually by paying or securing tax on the estimated gain.
- If no certificate is provided by closing, the buyer's lawyer withholds 25% of the gross price (not the gain) and remits it to the CRA if the certificate does not arrive in time.
- A buyer who does not withhold can become liable for the tax.
On a $900,000 sale, the holdback would be $225,000. Apply early: processing can take months.
The Underused Housing Tax
The federal Underused Housing Tax applied mainly to non-resident, non-Canadian owners from 2022. Budget 2025 proposed eliminating it from the 2025 calendar year, while 2022 to 2024 obligations remain. See Underused Housing Tax status.
Checklist for a buyer or seller with a non-Canadian connection
- Confirm the citizenship or permanent resident status of every person going on title.
- Check whether the property is inside a census metropolitan area or census agglomeration.
- If relying on an exception, get written legal advice on which one and the evidence needed.
- Add NRST, MNRST or BC's additional tax to the budget where they apply.
- Sellers: start the section 116 process before listing if you are non-resident.
Frequently asked questions
Can a permanent resident buy a home in Canada?
Yes. Permanent residents are not non-Canadians under the Act and are not subject to Ontario's NRST or BC's additional tax.
Can a foreign buyer buy a cottage?
Outside census metropolitan areas and census agglomerations, the federal ban does not apply. Provincial taxes may still apply; in Ontario, NRST applies province-wide.
Do the rules apply to commercial property?
The ban covers residential property as defined in the Act. Buildings with more than three dwelling units are not "residential property" for the ban, though other rules may apply.
Does a Canadian citizen living abroad pay NRST?
NRST targets foreign nationals, foreign corporations and taxable trustees; a Canadian citizen is not a foreign national. A citizen who is non-resident for tax purposes is, however, subject to section 116 when selling.
Sources
- Justice Laws Website — Prohibition on the Purchase of Residential Property by Non-Canadians Act and Regulations
- Department of Finance Canada — extensions and announcements
- Ontario Ministry of Finance — NRST
- City of Toronto — MNRST
- Government of British Columbia — additional property transfer tax and speculation and vacancy tax
- Canada Revenue Agency — section 116 certificates
