Who can buy property in Canada?

Foreigners can buy real estate in Canada, but there are some important considerations and regulations to be aware of.

In 2022, Canada introduced a ban on foreign buyers purchasing residential properties for a period of two years, starting January 1, 2023. This ban is aimed at addressing housing affordability issues in certain markets, such as Vancouver and Toronto. However, the ban does not apply to all types of properties. Foreigners can still purchase real estate under certain circumstances, such as for investment purposes in commercial properties or if they are purchasing land for development.

Foreign buyers have the same rights as Canadian citizens and residents to purchase property, subject to the restrictions mentioned above. There are no nationality-based restrictions for buying property in Canada, so non-residents can buy property in their name or through a corporation.

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Investing in Canadian real estate offers several compelling reasons, making it an attractive choice for both domestic and international investors. Canada has a stable and resilient economy, which provides a strong foundation for the real estate market. The country’s political stability, well-established legal framework, and transparency in property transactions contribute to a secure investment environment. Canada’s real estate market has shown long-term growth, driven by factors such as population growth, urbanization, and high demand for housing in key cities like Toronto, Vancouver, Montreal, and Calgary. The country’s immigration policies further bolster demand for housing, as new residents often seek to establish themselves in Canadian cities, increasing both the need for rental properties and long-term homeownership. Additionally, Canada’s highly regarded education and healthcare systems make it an appealing destination for people seeking a high quality of life, which in turn supports stable real estate values. 

For investors, Canadian real estate also offers the potential for steady rental income, especially in metropolitan areas with a large population of renters. Moreover, the country's relatively low interest rates and access to financing make real estate investments more accessible, even for international buyers. Tax incentives such as capital gains exemptions on primary residences and the ability to use tax-deferred methods for certain investment properties further add to the appeal. The Canadian government’s regulations protect property rights and offer transparent, regulated transactions, which help ensure a safe investment environment.

Below are some sought-after destinations for real estate investment in Canada:

• Toronto - As the financial and cultural capital of Canada, Toronto is a prime location for both residential and commercial real estate. Neighborhoods like Yorkville, the Financial District, and the Distillery District are especially popular for their vibrant lifestyle, world-class amenities, and connectivity. The city offers a diverse range of properties, from luxury condos and townhouses to office buildings, making it an ideal choice for investors seeking strong rental demand and long-term appreciation.
• Vancouver - Known for its scenic beauty, mild climate, and thriving real estate market, Vancouver is a top destination for property investment. Areas like Coal Harbour, Yaletown, and Kitsilano attract high-net-worth individuals and investors looking for prime residential and commercial properties. With its mix of luxury waterfront homes, multi-family units, and commercial spaces, Vancouver offers opportunities for both steady rental income and potential for market growth.
• Montreal - Montreal offers a unique combination of French and English-speaking communities, rich cultural diversity, and affordable real estate compared to other major Canadian cities. Popular areas like Plateau Mont-Royal, Griffintown, and Old Montreal are particularly attractive for those looking to invest in residential properties and rental units. Montreal’s growing tech and creative industries contribute to its real estate demand, making it a strong contender for long-term investment.
• Calgary - Calgary is a dynamic city known for its energy sector and outdoor lifestyle. Neighborhoods like Beltline, Mission, and Mount Royal offer investment opportunities in residential and commercial properties. Calgary’s relatively affordable real estate prices, coupled with its growing economy, make it an attractive location for investors seeking potential returns, especially in the industrial and office space sectors.
• Ottawa - As the capital city of Canada, Ottawa is a stable and attractive destination for real estate investment. With government offices, a strong tech sector, and an increasing population, Ottawa’s neighborhoods like Byward Market, Glebe, and Westboro offer residential and rental investment opportunities. Ottawa’s stable economy and high quality of life contribute to a strong demand for properties in the city.
• Edmonton - Edmonton is a growing city in Western Canada with a strong economy driven by energy, technology, and education sectors. Neighborhoods like Whyte Avenue, Downtown, and Oliver provide a variety of real estate opportunities for investors, including rental properties and family homes. Edmonton’s affordability compared to other major Canadian cities, coupled with its ongoing urban development, makes it an appealing market for investment.
• Quebec City - Quebec City, with its rich history and French heritage, is a unique real estate market. Areas like Old Quebec, St-Roch, and Sainte-Foy are attractive for investors interested in heritage properties and rental homes. Quebec City offers a relatively lower cost of living and an ever-growing tourism industry, making it an excellent choice for investment, especially in short-term rental properties.
• Victoria - As the capital of British Columbia's Vancouver Island, Victoria offers a more relaxed pace of life while still having a strong economy and real estate market. Neighborhoods such as Oak Bay, Downtown Victoria, and Saanich are particularly sought after for residential and vacation properties. Its proximity to Vancouver and picturesque waterfront locations make it a popular choice for those looking to invest in both long-term rentals and vacation homes.
• Halifax - Halifax, the capital of Nova Scotia, has become increasingly popular with investors due to its growing economy, vibrant culture, and reasonable property prices. Popular neighborhoods such as Downtown Halifax, Dartmouth, and North End are ideal for both residential and commercial real estate investments. With its proximity to the ocean and strong demand for rental properties, Halifax offers significant potential for returns on investment.

Where to find properties online:

• https://www.realtor.ca/
• https://www.zolo.ca/
• https://www.redfin.ca/

Financing

Foreigners can obtain mortgage loans in Canada, though the process is generally more complex than for Canadian citizens or permanent residents. Banks and financial institutions in Canada offer mortgage financing to non-resident buyers, but these loans often come with stricter requirements and conditions. Non-residents are usually required to make a larger down payment, with U.S. residents typically needing at least 20%, and non-U.S. foreign buyers requiring a minimum of 35%. Additionally, the down payment must be in a Canadian bank account for at least 30 days before closing, and the source of the funds must be verified.

Lenders will also assess the buyer’s financial situation by requiring proof of income and credit. If a Canadian credit history is unavailable, non-residents may need to provide an international credit report or a letter from their bank. Furthermore, non-residents generally face higher interest rates and shorter loan terms than Canadian residents.

It’s crucial for foreign buyers to consult with a mortgage broker or financial institution that is familiar with the specific requirements for non-residents. Other factors, such as local taxes, could also impact the overall purchase process. Buyers should be aware that some provinces, like Ontario, impose additional taxes, such as the Non-Resident Speculation Tax (NRST), which could significantly increase the cost of purchasing property.

Due Diligence and Sales Contract 

Due diligence is a critical step in the real estate transaction process. This includes thoroughly investigating a property to ensure it is free from any legal issues, such as encumbrances, unresolved disputes, or claims that may affect the transaction. A crucial part of this process involves verifying the property's title to confirm that the seller has the legal right to sell it. It's also essential to consider potential zoning restrictions, environmental concerns, and land-use regulations that could influence the property's value or future uses.

The closing process typically involves working with a real estate lawyer who will help prepare legal documents, conduct a title search, and ensure that the transfer of ownership is carried out legally. Buyers should work closely with a qualified lawyer to review all documentation, including the contract of sale and property inspection reports, and address any legal concerns. Title insurance may be recommended as a safeguard against potential title issues.

Additional costs for buyers include government land transfer taxes, property inspection fees, and legal fees. It's essential to account for these expenses in addition to the purchase price.

Property Buying Costs and Taxes in Canada

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.

Land Transfer Tax:

Land transfer taxes (property transfer tax or purchase tax in other provinces) are calculated between 0.5-2% of the property's total value. This is not imposed in Alberta, rural Nova Scotia, and Saskatchewan.

Real Estate Agent's Fee:

Real estate agent's fees are negotiable between 3% and 7% of the property value, plus 6% GST. Typically, realtors charge 7% on the first CAD100,000 (US$70,870) of the sales price and 3% on the remainder. The vendor normally pays for the agent's fees but in certain cases, there are two agents involved, the seller's agent and the buyer's agent.