It's Become Easier for Newcomers to Buy Property in Canada

Restrictions on Newcomers have been Eased

The government of Canada recently implemented a law that forbade non-Canadians from buying residential property. However, just a few months later, they made changes to the law and reduced restrictions for certain home buyers. The Canada Mortgage and Housing Corporation (CMHC) announced on March 27 announced that the prohibition on the purchase of residential property by non-Canadians act was amended, allowing non-Canadians on a work permit to purchase mixed-use residential and commercial land if they meet specific requirements. The amendments took effect immediately upon announcement.

Work permit holders are now qualified, according to CMHC, if at the time of purchase their work permit or work authorization had at least 183 days of validity left. Additionally, they have only bought one residential property in Canada. The term “residential property” as used in the Act refers to detached homes or comparable structures, semi-detached homes, rowhouse units, residential condominium units, and other premises of a like nature.

Additionally, the clause that applied to vacant land has been altered. It is now possible for non-Canadians to buy vacant land that is zoned for both residential and mixed-use, and to utilise it anyway they see fit, even for residential development.

Tax filing documentation has been excluded from list of requirements

The existing rules regarding tax filing and prior employment history in Canada are being overturned.

Although there were a few requirements for both holders of work and study permits, it was still technically possible for temporary residents to purchase a home in Canada under the original Act. Anyone in Canada with a work permit primarily needed to:

• Worked full-time in Canada for at least three years within the four years before buying the property, as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations (IRPA).
• Filed all necessary income tax returns under the Income Tax Act for a minimum of three out of the four years prior to the year of purchase.
• Have not bought more than one residential property.

Savings account for the first home has been introduced

The new Tax-Free First Home Savings Account (FHSA) was officially introduced in Budget 2023. On April 1st, 2023, financial institutions will be permitted to start promoting this proposal to Canadians, as it was first suggested in the federal government’s 2022 budget.

Read our article on Canada’s Budget 2023 here.

The programme enables potential first-time homeowners to save up to $40,000 tax-free. The maximum yearly contribution to the account is $8,000. Like a tax-free savings account, the scheme will allow tax-deductible contributions and non-taxable withdrawals for the purpose of buying a first home.

The First house Savings Account aids Canadians in saving for a down payment on their first house and is a component of the government of Canada’s strategy to increase housing affordability. Over the next five years, the FHSA is expected to support programmes worth $725 million, according to the government.

Participants who want to open an FHSA must be:

1. A citizen of Canada
2. Must be 18 or older
3. A novice homebuyer

The account can continue to be used for 15 years, or until the member becomes 71, or until the end of the year after an eligible withdrawal from an FHSA is made for the first house purchase, whichever occurs first.

Average housing costs in Canada

The national average home price was $662,437 in February 2023, down 18.9% from the previous record-setting month of February 2022, according to data from the Canadian Real Estate Association (CREA).

Although the number of newly listed homes fell by roughly 8% over the same period, further figures from March 2023 reveal that national house sales were up 2.3% month over month since February.

In Canada, housing costs are still uneven. With much higher borrowing rates, CREA claims that it is hardly unexpected that prices have mostly fallen from their peaks in more costly areas like Ontario and British Columbia. Quebec and the Maritime provinces fall somewhere in the middle, with prices holding up significantly better in Alberta, Saskatchewan, and Newfoundland and Labrador. In 2023, a 5.9% yearly fall in property prices is anticipated on a nationwide level.