Guide for Non-Residents Buying Property in Canada
Key Taxes, Financing Options, and the Buying Process Explained
Understanding the Underused Housing Tax
If you are a non-resident considering purchasing real estate in Canada, it's essential to be aware of the Underused Housing Tax. This federal tax imposes a 1% annual charge on the value of residential properties deemed "vacant or underused" and owned by non-residents. Before making a purchase, evaluate whether this tax will apply to your situation and factor it into your overall costs. Buying property in Canada as a non-resident in 2026 is significantly more restricted than in previous years. Currently, a federal ban—the Prohibition on the Purchase of Residential Property by Non-Canadians Act—is in effect and has been extended until January 1, 2027.
Financing and Mortgages for Non-Residents
Securing a mortgage in Canada as a non-resident can be challenging, but it’s not impossible. Most Canadian banks require a minimum down payment of 35% from non-resident buyers. You will also need to submit comprehensive documentation, such as international credit reports, proof of income from your country of residence, and a reference letter from your local bank. Additionally, opening a Canadian bank account is necessary to manage the closing process and make future mortgage payments.
The Buying Process Step-by-Step
1. Hire a Specialized Agent: Work with a REALTOR® who has experience with non-resident sales. They will help you find suitable properties and ensure the location isn’t in a restricted zone.
2. Legal Review: Engage a Canadian real estate lawyer or notary to oversee the title transfer and verify compliance with the Foreign Buyer Ban and other regulations.
3. CRA Compliance When Selling: When it’s time to sell, the Canada Revenue Agency (CRA) will withhold between 25% and 50% of the gross sale price. This withholding remains until you obtain a Certificate of Compliance, which is required to settle your capital gains tax obligations.
Purchasing property in Canada as a non-resident involves unique tax considerations, financing requirements, and legal steps. Planning ahead and seeking professional advice can help you navigate these complexities and make informed decisions.
