Guide to buying property in Vancouver as non-residents

The ban on foreign buyers buying Canadian property

Property ownership has recently been a hot topic in Canada, as supply shortages have priced many Canadians out of the housing market. The government quickly responded with a temporary ban on purchases of Canadian housing for foreigners, announced in June 2022 and extended to 2027 to curb the practice of speculative investments in the housing sector.

Who is a Non-resident under the Foreign Buyer Ban?

The ban includes non-citizens, non-permanent residents and foreign-controlled companies, with some exceptions for international students and temporary residents.

Amended Exemptions to the ban

Amendments to the ban further relaxed [exemptions], extending them to work permit holders or those authorized to work in Canada, who can now purchase a home while working there. Work permit holders must have 183 days or more of validity remaining on the permit at the time of the purchase, but cannot purchase more than one residential property.

The amendment also drew a clear distinction between non-residents adding to Canada's housing supply and those engaging in speculative investments by exempting vacant land zoned for residential and mixed-use from the ban so non-Canadians can purchase such land for residential development.

"These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities," Housing Minister Ahmed Hussen said in a statement to the CMHC.

Can you buy property in Vancouver as a non-resident?

You can still purchase property in Canada if you fall under the exemptions as a Study or a Work permit holder.

As a Study permit holder, an individual must also fulfil the following conditions:

• They filed all required income tax returns under the Income Tax Act for each of the five taxation years preceding the year in which the purchase was made,

• They were physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase was made,

• The purchase price of the residential property does not exceed $500,000, and

• They have not purchased more than one residential property

A Work permit holder must fulfil the following criteria:

They worked in Canada for a minimum period of three years within the four years preceding the year in which the purchase was made if the work is full-time work as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations (IRPA).

They filed all required income tax returns under the Income Tax Act for a minimum of three of the four taxation years preceding the year in which the purchase was made, and

They have not purchased more than one residential property.

Things to keep in mind when buying property as a non-resident

As a non-resident, you should be aware of additional hurdles in your path toward home ownership. We'll cover a few important ones below:

• Mortgage Financing: Temporary residents often need a larger down payment. You should also demonstrate a stable income and a good credit history.

• Insurance: Mortgage insurance is compulsory if your down payment is below 20%, applicable to both permanent and temporary residents.

• Taxation: Understand the tax implications of property ownership, including potential withholding taxes on rental income and capital gains for non-residents. Non-resident property owners in British Columbia and Vancouver are also subject to the Foreign Buyers Tax of 20% when they purchase a residential property in designated areas.

• Legal Status: Ensure your permit remains valid; changes or expirations can affect property ownership. Seek advice from an immigration lawyer to explore options.

• Property Management: If you're not in Canada year-round, you should also consider hiring a property management company to oversee your property during your absence.

Conclusion

In conclusion, property ownership is still possible for non-residents in Vancouver, provided they meet the required exemptions. It is essential to keep in mind your various responsibilities, including additional taxes and insurance or mortgage conditions.

Given the complexities of Canadian real estate laws and regulations, it's highly advisable for non-residents to seek legal assistance from a qualified real estate lawyer or consultant specializing in international transactions. A knowledgeable legal professional can help navigate the legalities, ensure compliance with regulations, and protect your interests throughout the buying process.