Introduction to Canada's Real Estate Market

Canada's real estate market has long attracted international buyers seeking stability, strong returns, and an exceptional quality of life. Major cities like Toronto, Vancouver, Montreal, and Calgary have drawn global capital from investors, expatriates, and families seeking educational opportunities and lifestyle benefits.

However, 2026 marks a pivotal year for foreign property investment in Canada. The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act, implemented in January 2023, remains in effect until January 1, 2027. This means 2026 is the final year of the ban, making it a critical time for international buyers to understand the rules, exemptions, and planning opportunities before the landscape potentially shifts.

Beyond the federal ban, provincial and municipal governments have introduced additional taxes targeting foreign buyers. Ontario's 25% Non-Resident Speculation Tax, British Columbia's 20% Additional Property Transfer Tax, and Toronto's 10% municipal foreign-buyer levy can substantially increase closing costs. For Americans particularly, the tax implications extend across both borders, involving FIRPTA on US properties and Canadian capital gains requirements.

The Foreign Buyers Ban: What It Actually Blocks

The Prohibition on the Purchase of Residential Property by Non-Canadians Act has been in effect since January 1, 2023, and has been extended to January 1, 2027. Understanding what this ban covers—and what it does not—is essential for any international buyer.

What the Ban Covers

• Residential properties with three or fewer dwelling units located within Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs)—effectively, most urban areas with populations above 10,000.
• Foreign nationals who are not Canadian citizens or permanent residents.
• Corporations and entities where foreign nationals hold 10% or more of equity or voting rights.

Who Is Exempt from the Ban

• Canadian permanent residents—fully exempt regardless of citizenship.
• Canadian citizens—exempt by definition.
• Work permit holders with at least 183 days remaining on their permit at the time of purchase.
• Spouses or common-law partners of Canadian citizens or permanent residents.
• Refugee claimants and protected persons.

What the Ban Does NOT Cover

• Recreational and rural property outside Census Metropolitan Areas and Agglomerations—cottages and rural properties are not subject to the ban.
• Buildings with four or more dwelling units—apartment buildings and larger multiplexes are excluded.
• Vacant land zoned for mixed-use or other purposes in certain circumstances.
• Commercial real estate—retail, office, and industrial properties remain fully available.
• Properties intended for development—purchases for building new housing are permitted under the development exception.

For Americans specifically, an important distinction exists: a US citizen holding a valid work permit with at least 183 days remaining may purchase one residential property within a covered area. However, the majority of American buyers not yet holding permanent residency or a qualifying work permit will find themselves subject to the ban for urban residential purchases.

Provincial and Municipal Taxes for Non-Resident Buyers

Even where the federal ban does not apply, international buyers face significant additional taxes at the provincial and municipal levels. These can dramatically increase the effective purchase price.

Ontario Non-Resident Speculation Tax (NRST)

• Rate: 25% of the purchase price—province-wide.
• Applies to all non-Canadian citizens and non-permanent residents purchasing residential property in Ontario.
• Toronto adds a municipal foreign-buyer levy of 10% effective January 2025, bringing the combined non-resident burden in Toronto to approximately 35% of the purchase price.

British Columbia Additional Property Transfer Tax

• Rate: 20% in Metro Vancouver and certain surrounding regional districts.
• Applies on top of standard BC property transfer taxes.
• Speculation and Vacancy Tax: 2% for foreign owners through 2025, rising to 3% from 2026 onward.

Nova Scotia

• Non-resident deed transfer tax: 10% applies to all non-Nova Scotia residents—not just foreign nationals.

Provincial Land Transfer Taxes (Standard Rates)

Crucial Note for Non-Permanent Residents: The NRST and additional transfer taxes apply regardless of whether the property is in a CMA or CA—they are broader than the federal ban. Permanent residents are exempt from these surcharges in all provinces, which is one of the most significant financial advantages of establishing permanent residency before purchasing Canadian real estate.

Property Options Available to International Buyers

Despite the federal ban and provincial taxes, several categories of property remain accessible to international buyers in 2026:

Recreational and Rural Properties

Properties outside CMAs and CAs—including cottages, cabins, and rural homes—are not subject to the federal ban. This makes recreational properties one of the most accessible entry points for foreign buyers. However, location is the deciding factor: the same property type that is restricted inside a CMA may be completely open just outside its boundary.

Multi-Unit Residential Buildings

Buildings with four or more dwelling units are not classified as restricted residential property under the federal rules, making them available to non-resident buyers. This includes apartment buildings and multiplexes.

Commercial Real Estate

Retail, office, and industrial properties remain fully available to non-residents under provincial transfer-tax regimes. Commercial property offers a clean entry point for international investors seeking Canadian real estate exposure.

Vacant Land and Development Sites

Vacant residential land intended for genuine development can qualify under the development exception, permitting purchase for new housing construction.

Condos in Certain Areas

Condos outside major census metropolitan areas remain fully available. The key factor is location—a condo that is restricted inside Toronto's CMA may be open to foreign buyers in a smaller city outside the CMA boundary.

Property Costs Across Major Canadian Markets

Canadian real estate pricing varies dramatically by region. Coastal cities like Vancouver and Toronto remain among the most expensive markets globally, while Québec and Atlantic Canada offer significantly better value.

Price Per Square Foot (2026 Indicative)

The gap between coastal and inland pricing is significant. Outside-centre figures in Québec stretch a US dollar considerably further than anything in BC or Ontario—and without the foreign-buyer surcharges that apply in those provinces.

Median Sale Prices (2026)

• Vancouver city centre: Approximately C$1,166/sq ft.
• Toronto city centre: Approximately C$1,085/sq ft.
• Québec City outside centre: Approximately C$373/sq ft.

Step-by-Step Guide to Buying Property in Canada

The purchase process for international buyers involves specific steps and documentation requirements:

Step 1: Choose a Location and Confirm Eligibility

Shortlist areas that fit your budget, travel plans, and lifestyle. Confirm whether the property falls under the federal ban and whether any exemptions apply. Check local bylaws that affect use and insurance.

Step 2: Arrange Financing

Request pre-approval from a Canadian lender. Non-resident programs typically require larger down payments—many lenders look for around 35% down when Canadian credit or local employment history is limited. Be prepared to provide:

• Two years of W-2s or tax returns.
• Recent pay stubs.
• Bank statements.
• Cross-border banking history or reference letter from your US bank.

Step 3: Hire a Canadian Real Estate Agent and Lawyer

Work with a local real estate professional to source listings and negotiate terms. Retain a Canadian lawyer to verify identity, review the agreement, and start title due diligence under client-ID and source-of-funds rules.

Step 4: Make an Offer and Provide Deposit

Your agent prepares the Agreement of Purchase and Sale with conditions suited to your situation. Once accepted, the deposit (commonly 10%) is typically due within 24 to 48 hours and is held in trust.

Step 5: Fulfill Conditions

Complete inspections, financing steps, and remove conditions when satisfied. Your lawyer completes title searches and obtains an insurance binder.

Step 6: Close the Deal

Your lawyer receives funds, registers the transfer, and releases keys on the closing date. Most transactions close about 30 to 60 days after acceptance.

Required Documentation for Foreign Buyers

The following documents are typically required for a non-resident purchase:

• Government Photo ID: Valid photo identification for identity verification under FINTRAC rules.
• Proof of Funds: Recent bank statements and wire details matching your down payment, with a clear paper trail showing the source of funds.
• Mortgage Pre-Approval and Income Proof: Pre-approval letter, two years of W-2s or tax returns, and recent pay stubs.
• Agreement of Purchase and Sale and Deposit Receipt: Signed agreement and trust receipt.
• CRA Individual Tax Number (ITN): If you are not eligible for a SIN and need a Canadian tax identifier, apply on Form T1261—may be needed for rental reporting or property sale.
• Residency or Work-Permit Evidence: If claiming an exception, include your work permit showing at least 183 days of validity.
• Title and Registration Package: Handled by your Canadian lawyer.

Financing for International Buyers

Who Lends to Non-Residents?

Major Canadian banks—RBC, TD, and Scotiabank—all offer programs for American buyers who can document income, assets, and either a US credit report or a Canadian bank reference.

Key Considerations for Foreign Buyers

• Down Payment: Typically 35% for non-resident applicants.
• Interest Rates: Variable rates typically starting around 5.0–6.0% for foreign buyers.
• US Credit Recognition: Canadian lenders may not automatically recognize a US FICO score—provide cross-border banking history or reference letter.

OSFI Mortgage Stress Test

For uninsured mortgages from federally regulated lenders, borrowers must qualify at the greater of the contract rate plus 2% or the OSFI minimum qualifying rate of 5.25%. This test applies even to foreign buyers, potentially reducing borrowing capacity.

Tax Considerations for International Buyers

Canadian Rental Income for Non-Residents

If you own Canadian property and rent it out while you are not a Canadian tax resident, Canadian tax law requires withholding on the gross rental payments under Part XIII of the Income Tax Act.

• The tenant or property manager is legally required to withhold 25% of each gross rental payment and remit it to the CRA monthly.
• On a property generating $3,000 CAD per month in rent, this means $750 CAD withheld monthly—$9,000 annually.

The Section 216 Election—Reducing the Withholding

The withholding can be reduced from 25% of gross to 25% of net rental income (gross rent minus eligible expenses) by filing a Section 216 election with the CRA. This annual filing calculates actual rental income after deducting:

• Mortgage interest.
• Property taxes.
• Insurance.
• Maintenance costs.
• Property management fees.

The Section 216 election is almost always worth filing but requires an annual Canadian tax return even if you are not a Canadian resident.

Capital Gains Tax When Selling Canadian Property

When an American in Canada eventually sells their Canadian property, both the CRA and the IRS may have a claim on the gain.

• Canadian Capital Gains: Taxed based on your Canadian cost base. The current capital gains inclusion rate for individuals is 1/2 on the first $250,000 of gains annually and 2/3 above that threshold.
• US Capital Gains: Taxed based on your US cost basis at US capital gains rates (typically 15% or 20% for long-term gains, plus 3.8% net investment income tax for higher earners).
• Foreign Tax Credit: Allows you to offset US tax owing with Canadian capital gains tax paid on the same gain, generally preventing true double taxation.

Section 116—Non-Resident Withholding Requirement

When a non-resident of Canada sells Canadian real estate, the purchaser is required to withhold a portion of the proceeds—typically 25% of the gross purchase price or 50% of the estimated gain—and remit it to the CRA. This continues until the seller provides a clearance certificate from the CRA confirming the tax on the gain has been paid or secured. For a $1M property sale, 25% withholding means $250,000 held by the purchaser until the clearance certificate is issued.

Key Point: Apply for the clearance certificate at least two months before the intended closing date to avoid delayed access to sale proceeds.

FIRPTA for Americans with US Property

FIRPTA—the Foreign Investment in Real Property Tax Act—creates a significant compliance obligation for Americans who have established Canadian tax residency and still own US real estate. When a foreign person sells US real property, the purchaser is required to withhold 15% of the gross sales price at closing.

Additional Annual Costs for Property Owners

Beyond the purchase price, property owners in Canada face ongoing obligations:

• Annual Property Tax: Varies by municipality—funds local services.
• Vacancy Taxes: Some municipalities charge additional taxes for vacant properties.
• Vancouver's Empty Homes Tax: 3% of assessed value per year.
• Toronto's Vacant Home Tax: 3% of assessed value per year.
• BC Speculation and Vacancy Tax (foreign owners): 3% from 2026 onward.

Example: A C$600,000 cottage in BC carries an annual speculation tax bill of C$18,000 from 2026—before property tax, maintenance, or financing costs.

Frequently Asked Questions

Q: Can foreigners buy property in Canada in 2026?

A: Yes, but with significant restrictions. The federal Foreign Buyers Ban remains in effect until January 1, 2027, blocking most non-Canadians from purchasing residential property in urban areas. Exemptions apply for permanent residents, work permit holders with 183+ days remaining, and purchases of recreational property outside CMAs/CAs.

Q: Can Americans buy property in Canada?

A: Yes, but subject to the same federal ban and provincial taxes. Americans with Canadian permanent residency are fully exempt. US citizens with valid work permits (183+ days remaining) may purchase one residential property in a covered area. Most other Americans purchasing urban residential property are subject to the ban.

Q: What additional taxes do foreigners pay when buying property in Canada?

A: Significant provincial and municipal surcharges apply: Ontario's 25% Non-Resident Speculation Tax, British Columbia's 20% Additional Property Transfer Tax, and Toronto's 10% municipal levy. These are on top of standard land transfer taxes.

Q: Is it cheaper to buy property in Quebec vs Ontario?

A: Yes, significantly. Quebec offers lower property prices—approximately half the cost per square foot outside major cities compared to Toronto—and lower purchase costs for non-residents. Quebec's non-resident surcharges are generally lower than Ontario's 25% NRST.

Q: Can I rent out my Canadian property as a non-resident?

A: Yes, but Canadian tax law requires 25% withholding on gross rental income unless you file a Section 216 election to have tax calculated on net income. The Section 216 election requires an annual Canadian tax return.

Q: What happens to my US property when I buy in Canada?

A: Americans establishing Canadian tax residency may face FIRPTA withholding (15%) when selling US property as a foreign person. Cross-border tax planning is strongly recommended before making any purchase.

Q: What documents do I need to buy property in Canada as a foreigner?

A: Valid photo ID, proof of funds with clear paper trail, mortgage pre-approval and income documentation, Agreement of Purchase and Sale, CRA Individual Tax Number (if required), and residency or work-permit evidence if claiming an exception.