Can You Own Property in Canada? Ban, Taxes, and Financing

Yes, foreigners can own property in Canada, but the answer comes with real limits. A federal ban currently blocks most non-Canadians from buying residential homes in urban areas through the end of 2026, and buyers who fall outside that ban still face provincial taxes designed for foreign purchasers, larger down payment requirements, and annual filings with the Canada Revenue Agency. Getting any of it wrong can mean fines, oversized tax withholding, or a court-ordered sale.

What the Federal Ban Blocks

The Prohibition on the Purchase of Residential Property by Non-Canadians Act took effect on January 1, 2023, and has been extended through January 1, 2027.¹ It prohibits anyone who is not a Canadian citizen, permanent resident, or person registered under the Indian Act from purchasing covered residential property. Foreign corporations and Canadian corporations controlled by non-Canadians are also caught.²

The prohibition covers buildings with three or fewer dwelling units, including detached homes, semi-detached homes, and condominiums, but only when the property sits within a Census Metropolitan Area or Census Agglomeration as defined by Statistics Canada.² That geographic limit is the detail most buyers miss. Rural land and many recreational properties fall outside the population centers the ban covers, and remain available to foreign purchasers.³

Who Can Still Buy During the Ban

Temporary residents holding a valid work permit can purchase one residential property, provided the permit has at least 183 days of validity remaining on the purchase date.³ The one-property cap is strict. Even if you sell that first home, a second purchase during the ban period violates the Act.

A conviction for violating the ban carries a fine of up to $10,000, and a court can order the property sold. The same penalty applies to anyone who knowingly assists a non-Canadian in making a prohibited purchase, including real estate agents and lawyers.²

Provincial Foreign-Buyer Taxes

Where the federal ban doesn’t reach, provinces impose their own taxes on foreign purchasers, and they can add tens of thousands of dollars to a transaction.

Ontario

Ontario charges a 25% Non-Resident Speculation Tax on residential property purchased by foreign nationals, foreign corporations, or taxable trustees anywhere in the province.⁴ The tax applies to “designated land” containing one to six single-family residences. It’s charged on top of Ontario’s standard land transfer tax, so a foreign buyer pays both. On a $1 million home, the NRST alone is $250,000.

British Columbia

British Columbia levies a 20% Additional Property Transfer Tax on foreign nationals and foreign corporations buying residential property in designated metro areas: Metro Vancouver, the Fraser Valley, the Capital Regional District, Central Okanagan, and Nanaimo.⁵

BC also imposes an annual Speculation and Vacancy Tax on homes left empty in certain urban areas. Starting in 2026, the rate for foreign owners is 3% of assessed value, up from 2%. Canadian citizens and permanent residents with vacant homes in those areas pay 1%, up from 0.5%.⁶ Leaving a BC property empty is now considerably more expensive for foreign owners than it was a year ago.

Financing a Non-Resident Purchase

Most Canadian lenders require non-residents to put down at least 35% of the purchase price, compared to the 5% to 20% minimums available to Canadian residents.⁷ Some lenders offer better terms for U.S. residents or buyers with existing Canadian banking relationships, but 35% is the standard starting point.

Expect additional documentation that Canadian residents don’t usually need to produce:

Down payment funds parked in a Canadian bank account for 30 to 90 days before closing, which means opening a Canadian account and moving money well in advance.
A reference letter from your home-country bank confirming your account history and standing.
Income verification, such as pay stubs, tax returns, or business financials, sometimes requiring translation and notarization.
A Canadian property appraisal arranged by the lender.

International fund transfers take longer than most buyers expect. Compliance checks on both ends and the seasoning requirement mean this needs to start months before closing, not weeks.

Tax on Rental Income

A non-resident who rents out Canadian property owes a flat 25% withholding tax on the gross rent received. The Canadian property manager or agent collecting the rent is legally responsible for remitting that tax to the CRA by the 15th of the month after each payment.⁸

Twenty-five percent of gross rent is punishing because it ignores mortgage interest, property taxes, insurance, and maintenance. A property that barely breaks even on paper can still generate a large tax bill. The fix is Form NR6, filed jointly by you and your Canadian agent, which lets withholding be calculated on net rental income. You then file a return under Section 216 of the Income Tax Act to report actual income and expenses, often producing a partial refund of tax already withheld.⁸

The Underused Housing Tax

Since 2022, Canada has imposed a 1% annual tax on the value of residential property considered vacant or underused, aimed primarily at foreign national owners.⁹ Affected owners must file an annual UHT return even if the property is occupied and no tax is owed. Missing the deadline triggers a minimum $1,000 penalty for individuals.¹⁰

Bill C-15 proposes eliminating the UHT filing requirement for 2025 and later years.¹¹ As of early 2026, the bill had not received Royal Assent, so the obligation technically remains in force. Returns for 2022 through 2024 are still required if they haven’t already been filed.

Tax When You Sell

Non-residents pay Canadian tax on any profit from selling Canadian property. The buyer is required to withhold 25% of the total sale proceeds unless you first obtain a Certificate of Compliance from the CRA.¹² The withholding is on the full price, not the gain. On a $500,000 sale, the buyer holds back $125,000 regardless of your actual profit.

To avoid that, you notify the CRA of the sale on Form T2062, ideally at least 30 days before closing. Once you pay or secure 25% of the actual capital gain, the CRA issues the certificate and the buyer can release the rest of the proceeds.¹³ Failing to notify the CRA within 10 days after the sale can bring additional penalties. Canada taxes capital gains at a 50% inclusion rate, meaning half of your profit is added to taxable income.

What Happens When a Non-Resident Owner Dies

Canada treats a non-resident owner’s death as a deemed sale of the property at fair market value on the date of death. The estate must file a final Canadian tax return reporting that deemed disposition and pay tax on any capital gain, even though the property wasn’t actually sold.¹³ If the estate later sells the property to distribute proceeds, the standard Section 116 process applies to that second transaction as well.

The deemed disposition catches families off guard. A property that has appreciated over decades can generate a substantial tax bill the moment the owner dies, with no sale proceeds to fund it. Life insurance, a trust structure, or other planning arrangements are worth discussing with a cross-border tax advisor while the owner is still alive.

Extra Obligations for U.S. Buyers

Americans buying Canadian property owe tax on both sides of the border. The U.S.-Canada tax treaty lets you claim a foreign tax credit on your U.S. return for income taxes paid to Canada, which prevents double taxation on rental income and capital gains.¹⁴ The credit is capped at the proportion of your U.S. tax bill that your Canadian-source income represents, so it won’t erase U.S. tax entirely if you have significant domestic income.

Directly held foreign real estate does not need to be reported on IRS Form 8938, which covers specified foreign financial assets.¹⁵ A Canadian bank account is a different matter. If the combined balance of all your foreign accounts exceeds $10,000 at any point during the year, you must file FinCEN Form 114 (the FBAR) with the Financial Crimes Enforcement Network.¹⁶ Penalties for a missed FBAR filing can reach $10,000 or more per violation.

Ownership Is Not Immigration

Buying Canadian property gives you no right to live in Canada, apply for permanent residency, or become a citizen. Immigration is governed entirely by Immigration, Refugees and Citizenship Canada, and no amount of real estate investment changes that. Property ownership can serve as supporting evidence in some business or entrepreneur immigration streams where financial ties to Canada help the case, but it never substitutes for meeting the program’s actual requirements.

1
Department of Finance Canada. Government Announces Two-Year Extension to Ban on Foreign Ownership of Canadian Housing
2
Canada Mortgage and Housing Corporation (CMHC). Prohibition on the Purchase of Residential Property by Non-Canadians Act
3
Justice Laws Website. Prohibition on the Purchase of Residential Property by Non-Canadians Regulations
4
Government of Ontario. Non-Resident Speculation Tax
5
Province of British Columbia. Additional Property Transfer Tax for Foreign Entities and Taxable Trustees
6
Province of British Columbia Government. Tax Rates for the Speculation and Vacancy Tax
7
Financial Consumer Agency of Canada. How Much You Need for a Down Payment
8
Canada Revenue Agency (CRA). Rental Income and Non-Resident Tax – Filing and Reporting Requirements
9
Canada.ca. Underused Housing Tax (UHT)
10
Government of Canada. When to File the Return and Pay the Tax – Underused Housing Tax
11
Parliament of Canada. Bill C-15 – An Act to Implement Certain Provisions of the Budget Tabled in Parliament on November 4, 2025
12
Canada.ca. Disposing of or Acquiring Certain Canadian Property
13
Canada Revenue Agency (CRA). Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116
14
Internal Revenue Service. United States-Canada Income Tax Convention
15
Internal Revenue Service. Comparison of Form 8938 and FBAR Requirements
16
FinCEN.gov. Report Foreign Bank and Financial Accounts