Canada’s residential tax regimes

Provincial speculation taxes

These taxes are levied at the time of purchase, imposed on purchasers that are neither Canadian citizens nor permanent residents. Affected purchasers must file an additional return with their land transfer tax declarations and pay the additional tax.

In Ontario, this tax is 25 percent of the total purchase price. It applies to residential properties of up to three units across the province. Rebates are available if the purchaser becomes a citizen or permanent resident within four years of purchase, or meets certain enrolment criteria in Ontario post- secondary education.

British Columbia's Foreign Buyers Tax imposes a 20 percent tax in designated regions. Exemptions and rebates similar to Ontario’s exist, provided certain conditions are met within a designated timeframe.

Nova Scotia's Non-Resident Deed Transfer Tax imposes a 5 percent tax on the purchase price of residential property. The tax applies to purchasers who are non-residents of Nova Scotia, meaning Canadian citizens who do not live in the province are not exempt.

Federal underused housing tax

This federal law applies on a yearly basis to all residential properties in Canada owned by non-residents, individually or through private Canadian corporations. Those affected must register for a tax ID and file returns each year by April 30 following a calendar year during which they owned residential property. Failure to file results in penalties of CAD 5,000 to CAD 10,000 per property owned, whether or not tax is applicable.

The tax is 1 percent of the fair- market value of the residential property, if no exemptions apply. One exemption is the lease of property to an arm’s- length tenant, where the property is inhabited for at least 180 days.

Municipal vacancy taxes

Toronto and Vancouver also impose vacancy taxes on residences. The Vacant Home Tax requires that homeowners make an annual declaration on each residential property owned. Those using the property as a principal residence, or who enter into a long-term lease with a tenant, are exempt, but all owners must declare by February for the previous calendar year.

Federal prohibition on non-Canadian purchases

This year, the federal government placed a 2-year moratorium on the purchase of residential property by non- Canadians such that investment in the Canadian residential real estate market largely precludes foreign direct ownership until at least 2025.

Support for partners

Canada is a federal system, so not all areas are affected equally. We can help you determine what rules apply and can assist with registration, filing, and all other compliance.

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