Prohibition on the Purchase of Residential Property by Non-Canadians
New legislation was passed known as the Prohibition on the Purchase of Residential Property by Non-Canadians. Relocation experts are predicting that this will have a significant effect on BVO transactions for Canadians who are relocating to the U.S. The main reason is that now there will be a limit on home purchases for Canadian-bound foreign nationals within the U.S.
This is part of the Budget Implementation Act of 2022, passed into law on August 31, 2021. But the effective date won’t kick in until January 1, 2023, and will be in full effect for two years. The legislation forbids non-Canadian individuals or Canadian-owned corporations from purchasing residential properties anywhere within the U.S. This could impact companies’ relocation assignments.
Who Does the Legislation Applies to:
This new legislation applies to any individual who is neither a Canadian citizen nor a permanent resident, along with corporations not incorporated under Canadian federal or provincial laws. Also, a Canadian corporation not listed on the stock exchange in Canada that is controlled by persons who are non-Canadian nor nonresident, persons or entities prescribed by legislation.
The fact that “control” must be managed by individuals who are not subject to the Act (i.e. resident Canadian citizens) may be necessary for U.S.-based RMCs. They maintain a Canadian subsidiary to avoid classification as a non-resident seller of real estate.
Exemptions to the Act May Include
- Purchase agreements entered into or assumed by January 1, 2023, even if the purchase closes after this date;
- Certain non-Canadians:
- Temporary residents such as students and foreign workers with federally issued work permits;
- Persons afforded federal refugee protection;
- A non-Canadian who purchases the home provided their spouse or common-law partner is a Canadian citizen, a permanent resident, a temporary resident, or a Protected Person as prescribed by law.
What this Means for Relocation Transferees
The legislation does not prevent foreign nationals from relocating to Canada but would prevent them from purchasing property there unless the transferee or their spouse/domestic partner has Canadian citizenship.
Worldwide ERC supports the Canadian Employee Relocation Council (CERC) in its efforts to communicate with the Canadian government and obtain exemptions from the Act for domestic and cross-border relocations. CERC has submitted recommendations for allowing non-residents with valid work permits to purchase the property and is asking for the exemption to be granted.
Craig Anderson, the Vice President of AECC, is the Chair of WERC’s Global Tax Forum and monitors this legislation closely. According to CERC’s Global Workforce Symposium in Las Vegas, the following information will show their efforts’ status.
Every Saturday, the Canadian Gazette publishes regulations affecting this legislation. Our team monitors these weekly regulations for matters affecting our clients’ relocations within Canada or across the border. We will provide additional updates as needed.
GMS Can Offer Alternatives
Global Mobility Solutions (GMS) has been the leader in the relocation industry for over 30 years. We take pride in working with companies and their employees to ensure they can be comfortable and happy with their real estate purchases when moving for a job. Our team works with companies to set up home-buying and selling assistance programs that can make the relocation process smoother.
It is our goal to ensure the most seamless relocation process possible. If you have any questions about real estate laws, rules, or regulations, don’t hesitate to get in touch with one of our relocation real estate specialists. Or, if you need information about home buying and selling assistance programs for your employee relocation packages, contact us today to set up a free consultation.
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