Since January 2023, Canada’s federal foreign buyer ban has made it illegal for most non-residents to buy residential property in the country — and the rules come with costs that go well beyond the purchase price. The ban, now extended to 2027, covers buildings with up to three dwelling units in most urban areas. For non-residents who meet exemption criteria, provincial taxes in Ontario and British Columbia can add 20% to 25% to the purchase price alone. If you are thinking about buying property in Canada as a non-resident, the full picture includes federal restrictions, provincial taxes, annual filing obligations, and penalties for getting it wrong.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The federal ban is the first thing to understand, but it is far from the only cost. Provincial taxes, annual filing requirements, and special rules for rental income and resale all add layers. Here is what you actually need to know.
Before going further, it helps to pin down the central term. The ban defines a non-Canadian as anyone who is not a Canadian citizen, permanent resident, or person registered under the Indian Act. It also covers corporations controlled by non-Canadians.
What I tend to notice is that many people assume “non-resident” and “non-Canadian” mean the same thing. They do not. A non-resident who is a Canadian citizen is not affected by the ban. A non-citizen who lives in Canada on a work permit may qualify for an exemption — but only if they meet strict conditions.
What the full tax picture looks like across provinces
The purchase price is only the start. Non-residents face a stack of taxes and fees that can easily add hundreds of thousands of pounds to the total cost. The table below shows the main charges by province.
→ Scroll right to see all columns
| Province | Foreign Buyer Tax | Additional Annual Taxes |
|---|---|---|
| Ontario | 25% Non-Resident Speculation Tax on purchase price | 1% Toronto Municipal Vacant Home Tax; 10% Toronto MNRST (from 2025) |
| British Columbia | 20% Property Transfer Tax in specified areas | 2% speculation and vacancy tax for non-residents; 5% Vancouver vacant home tax |
| Quebec | Additional municipal tax (varies by location) | Municipal vacant home tax where applicable |
| Prince Edward Island | 25% surcharge on non-resident land purchases | N/A |
On top of those provincial charges, the federal Underused Housing Tax takes 1% of the property’s value every year if the property is vacant. Say you own a condo valued at $500,000 that sits empty for the year. The UHT bill is $5,000. And you must file a return every year by April 30 even if you qualify for an exemption — fail to file and the minimum penalty is another $5,000.
Financing adds another layer. Non-residents typically need a down payment of 35% to 50% and face higher interest rates. Fewer lenders offer mortgages to non-residents, and those that do require international credit checks, income verification, and usually a Canadian bank account. Worth weighing against the shift toward smaller Canadian markets where prices are lower but the same tax rules still apply.
Where non-residents get the rules wrong
Not filing the Underused Housing Tax return
This is the most common mistake I see. The UHT return is due every April 30, and the Canada Revenue Agency does not send reminders. If you own a property in Canada as a non-resident, you must file even if the property is occupied by a tenant or a family member. The penalty for failing to file is a minimum of $5,000. For a property that would owe no tax, that penalty turns a paperwork gap into a significant cost. The fix is straightforward: file the return on time, every year, even when no tax is due.
Assuming the foreign buyer ban does not apply to your situation
The ban covers residential properties with three or fewer dwelling units within census metropolitan areas and census agglomerations. That includes most major cities — Toronto, Vancouver, Montreal, Calgary, Edmonton, Ottawa, Halifax, and many others. Rural areas and properties with four or more units are exempt, but buyers sometimes assume their purchase falls outside the ban without checking the exact boundaries. The penalty for buying in violation is a fine up to $10,000 and a court-ordered sale of the property. The proceeds go to the buyer only up to the original purchase price, meaning any market loss is yours to absorb.
Not getting a clearance certificate when selling
Non-residents who sell Canadian property must notify the Canada Revenue Agency and obtain a clearance certificate (Form T2062) before closing. The processing time is 6 to 8 weeks. If you do not have the certificate at closing, the buyer is required to withhold 25% of the gross sale price and send it to the CRA within 30 days. That means a chunk of your sale proceeds is frozen until you file your tax return and get the overpayment back. The notification itself must be submitted within 10 days of the proposed disposition, or you face a penalty of $25 per day, with a minimum of $100 and a maximum of $2,500.
Using the wrong withholding method for rental income
The default rule is that a non-resident landlord must pay 25% of gross rental income to the CRA. On a property renting for $2,500 per month, that is $7,500 per year withheld. But a Section 216 election allows you to report net rental income instead — deducting expenses like mortgage interest, property management, repairs, and insurance. In the example from the research, gross rent of $30,000 with $18,000 in expenses leaves a net income of $12,000, taxed at roughly $3,000. That saves $4,500 compared to the default withholding. The catch: you must file an NR6 form before renting and obtain CRA approval for reduced withholding. Many landlords miss this step and overpay by thousands.
How to buy, hold, and sell property as a non-resident
Checking eligibility under the federal ban
Before making an offer, confirm whether you qualify for an exemption. The main paths are: holding a valid work permit with at least 183 days remaining at the time of purchase (no prior purchase under this exemption), or being an international student enrolled full-time at a Designated Learning Institution for at least five years, with a purchase price no higher than $500,000, and limited to one property. Refugees and protected persons are also exempt. Canadian citizens and permanent residents are not affected by the ban at all. If you do not meet any exemption, you cannot buy residential property in a CMA or CA until the ban expires — currently January 1, 2027. You can, however, buy vacant land (as of March 2023) or a building with four or more dwelling units.
Understanding the full tax bill before you close
Once you confirm eligibility, work out the provincial tax. In Ontario, the 25% Non-Resident Speculation Tax applies to the full purchase price. In British Columbia, the 20% foreign buyer tax applies in specified areas like Metro Vancouver and parts of the Fraser Valley. These are due at closing, on top of land transfer tax, legal fees, and any mortgage costs. If you are buying in Toronto, note that the city introduced a 10% Municipal Non-Resident Speculation Tax effective January 1, 2025. A non-resident buying a $1 million home in Toronto could face $250,000 in provincial NRST plus $100,000 in municipal NRST — a total of $350,000 in foreign buyer taxes alone. Rebates are available in some cases, such as becoming a permanent resident within four years of purchase.
Renting out the property and filing rental income
If you plan to rent the property, you have two options for tax. The default is 25% withholding on gross rent. The better option for most landlords is the Section 216 election, which lets you deduct expenses and pay tax only on net income. To use it, file an NR6 form with the CRA before the first rental payment is due. Once approved, your tenant or property manager withholds tax based on net income rather than gross. The Section 216 return itself is due within six months after the end of the tax year. If you hire a property manager, they can handle the withholding — but the filing responsibility stays with you. A cross-border tax specialist can help with the NR6 and Section 216 paperwork to make sure you claim the right deductions.
Selling the property and getting the clearance certificate
When you sell, the process starts with notifying the CRA of the proposed disposition — within 10 days of the sale or proposed sale. You then apply for a clearance certificate using Form T2062. The CRA takes 6 to 8 weeks to process it. If you do not have the certificate at closing, the buyer must withhold 25% of the gross sale price and remit it to the CRA within 30 days. You get that money back only after filing your tax return, which can take months. Capital gains are taxed at a 50% inclusion rate (or 66.67% on gains over $250,000), with a 25% tax rate applied or via a filed return. If you are selling a property you bought under the ban’s exemptions, keep all documentation — work permits, study permits, enrolment letters, and residency proof — to show the CRA that the original purchase was legal.
Frequently asked questions about buying property in Canada as a non-resident
Can I buy a cottage or recreational property as a non-resident? ▾
What happens if I buy a property through a Canadian corporation I control? ▾
Can I apply for a rebate of the Ontario NRST? ▾
Do I need a Canadian bank account to buy property? ▾
What happens if I overpay the UHT by mistake? ▾
Does the ban apply to buying a property for my child who studies in Canada? ▾
What the federal ban and provincial taxes mean for the next few years
The foreign buyer ban is scheduled to expire on January 1, 2027, but it has already been extended once. Provincial taxes in Ontario, British Columbia, and Quebec will remain regardless of what happens at the federal level. That means the cost of buying property as a non-resident is unlikely to drop significantly even after the ban lifts. For anyone considering a purchase now, the practical path is to either qualify for an exemption or wait. If you do qualify, the key is to budget for the full tax stack — not just the purchase price — and to file every return on time, even when no tax is due. The penalties for getting it wrong are large enough to erase any investment gain.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read the truth about foreign investors and their impact on Canadian real estate.
Sources and Further Reading
Why some Canadians are choosing fractional home ownership — A look at alternative ownership models that some non-residents use to gain exposure to Canadian property without triggering the full tax burden.
Will Canadian home prices keep rising or are we headed for a market correction? — Market context that matters for any non-resident deciding whether to buy now or wait.
Canada Mortgage and Housing Corporation (2024). Prohibition on the Purchase of Residential Property by Non-Canadians Act. 🔗
WealthNorth (2024). Non-Resident Property Tax in Canada. 🔗
HouseIndex (2024). Canada Foreign Buyer Ban Complete Guide. 🔗
Durham Region Law (2024). Buying or Selling Property as a Non-Resident in Canada. 🔗
