Are you an American thinking about buying property in Canada? After the recent U.S. election, many people who are unhappy with the results have been performing Google searches about moving to Canada. Of course, there are complicated visa rules that will prevent many people from moving, but those with degrees in in-demand fields may be eligible for CUSMA (Canada-United States-Mexico Agreement, formerly called NAFTA) temporary visas. These include professionals with degrees and licenses in fields such as medicine, science, education, accounting, architecture, computers, economics, engineering, forestry, graphics design, hotel management, interior design, surveying, law, library sciences, management consulting, math, research, social work, forestry, urban planning, and vocational counselling, and who have already received job offers. Other visas may be possible as well, but assuming you aren’t married to a Canadian, the CUSMA visas are often the easiest to obtain, to get your foot in the door. After proving yourself to an employer, you can work on a more permanent visa. Immigration law is complicated and an immigration lawyer should be consulted before assuming you would be allowed to work in Canada. An accountant should also be consulted to discuss taxes. Many Americans who have moved to Canada have been surprised with how much higher taxes are in Canada despite the generally lower salaries.
Assuming that you have tackled the visa and tax issues, what are the restrictions I’ve been hearing about? Whether you’re eyeing a cozy cabin, a summer cottage, or an urban condo, there are rules you need to know before diving in. Recent Canadian laws have added some restrictions on non-resident ownership, and knowing the details can help you navigate the process smoothly. Let’s dive into the essentials!
What Is the Prohibition on the Purchase of Residential Property by Non-Canadians Act?
Canada’s Prohibition on the Purchase of Residential Property by Non-Canadians Act is a law designed to help address Canada’s housing crisis. This Act is particularly important for Americans or anyone from outside Canada who wants to buy property. It prevents most non-Canadians from purchasing certain types of residential property in major Canadian cities and towns until January 1, 2027.
This law only applies to certain types of properties, so you still have options depending on what you’re looking to buy and where.
Who Does the Act Apply To?
The Act mainly affects non-Canadian citizens, including U.S. citizens, who want to buy residential property in Canada. It also applies to:
- Corporations controlled by non-Canadians.
- Any company formed in Canada or its provinces that is controlled by a non-Canadian and isn’t publicly listed on a Canadian stock exchange.
Note: If you’re a Canadian citizen, permanent resident, or registered under the Indian Act, this restriction doesn’t apply to you. As a dual citizen myself, I was wondering if non-resident Canadian citizens are eligible to buy real estate in Canada. I do not see any prohibitions against non-resident Canadian citizens buying real estate in Canada.
What Types of Properties Can You Buy?
Types of Residential Properties Restricted
The Act limits the purchase of residential properties with three or fewer units. This includes:
- Single-family homes
- Semi-detached houses
- Condominiums with three units or fewer
Vacant land zoned for residential or mixed use is also restricted.
Where You Can Buy Property
The law focuses on properties in larger metropolitan and urban areas. Here’s a breakdown of where you can and cannot buy as a non-Canadian:
- Restricted Areas: Properties located within a Census Metropolitan Area (CMA) or Census Agglomeration (CA) are mostly off-limits. A Census Metropolitan Area is one that has a total population of at least 100,000, with 50,000 or more living in the core. Larger cities like Toronto or Vancouver fall under this category. A Census Agglomeration is an area that has a population of at least 10,000. For example, the relatively small town of Nelson, BC, which is near us here in Cheney, WA, is a Census Agglomeration.
- Allowed Areas: If the property is located outside these CMAs and CAs, you’re allowed to purchase it. Smaller towns or rural areas are generally open for non-Canadian buyers. For example, places like Christina Lake, BC, with a population of about 1500, are outside these restrictions, making them accessible to U.S. buyers.
Exceptions to the Ban
The Act includes several exceptions, allowing non-Canadians to purchase residential property in certain situations:
- Divorce or inheritance: You can inherit a property or acquire one as a result of a divorce.
- Development purposes: If you’re buying property to develop it, you’re also exempt from the restrictions.
- Rentals: Renting a property in Canada is unaffected by this law, so you’re free to rent without restrictions.
How Does the Law Work in Practice?
If a U.S. citizen is caught buying restricted property, the consequences can be severe. Violators can face a fine of up to $10,000, and the courts may even order the property to be sold. So it’s crucial to understand where and what you can legally buy to avoid any issues.
FAQ About Can Americans Buy Real Estate in Canada
1. Can Americans buy real estate in Canada?
Yes, but with certain restrictions. As a U.S. citizen, you can buy certain types of properties outside major urban areas or restricted residential zones.
2. Are U.S. citizens allowed to buy vacation homes or cottages in Canada?
Yes, many vacation homes or cottages in rural or less populated areas are accessible to Americans. These areas are generally outside Census Metropolitan Areas (CMAs) or Census Agglomerations (CAs).
3. What if I want to buy a condo in a big city like Toronto?
Unfortunately, under the Act, U.S. citizens cannot purchase condos in larger urban areas (CMAs and CAs) until 2027.
4. Are there ways for Americans to buy property in Canadian cities legally?
If the property is a multi-unit building with four or more units, it’s allowed under the Act. You can also look into exceptions, like buying property for development purposes.
5. Can I inherit property in Canada if I’m a U.S. citizen?
Yes, inheritance is an exception under the Act, so you can inherit property without restriction.
6. Can I rent property in Canada as an American?
Absolutely! Renting a property is unaffected by the Act, so you’re free to rent a home or condo anywhere in Canada.
Key Takeaways
- U.S. citizens can buy certain types of real estate in Canada, particularly outside major urban areas.
- Residential properties with three or fewer units in large urban areas are restricted until 2027.
- Exceptions exist for inheritance, development, divorce, or rental purposes.
- Violating the Act can result in significant fines, so it’s best to consult a real estate expert to guide you through the process.
Whether you’re planning a move or looking for a second home, Canada’s real estate market offers unique opportunities, even with some restrictions in place. By knowing where you can and cannot buy, you can make informed choices and find the property that suits your needs—without getting into trouble! Whether there will be a crash is another story. Toronto prices fell once again in October, 2024. Prices have now rolled back to where they were 3-years ago. They will bottom eventually, of course. When they do, maybe the ban will be over. Whether you can find positive cash flow in Canada is another question. Cap rates are currently lower in Canada than they are in the U.S., as is affordability (prices versus incomes).