In 2018, the government of Canada announced measures to curb foreign ownership of Canadian homes, which included the implementation of a new mortgage stress test for all borrowers, regardless of whether they are buying a home with a low-ratio or a high-ratio mortgage.
Additionally, it introduced a new foreign buyers' tax on properties purchased in the Greater Golden Horseshoe region of Ontario, which includes Toronto, as well as in British Columbia. The tax was designed to help cool these hot housing markets, which had seen prices skyrocket in recent years due to strong demand from foreign buyers.In 2023, the Government of Canada extended this measure has temporarily banned all new foreign ownership in all Canadian housing markets to ensure Canadians have more access to purchasing homes. As a temporary measure to help stabilize the housing market coming out of COVID-19, The Government of Canada has banned foreign money from purchasing a non-recreational, residential property in Canada for the next two years, unless this purchase is confirmed to be for future employment or immigration in the next two years. This will also allow them to work with provinces and municipalities to develop a framework to better regulate the role of foreign buyers in the Canadian housing market so that this money does not deter housing from being available for and used by Canadians.As outlined in Budget 2021, The Government of Canada has implemented, starting January 1, 2022, Canada’s first-ever national tax on non-resident, non-Canadian owners of vacant, underused housing and we will extend this to include foreign-owned vacant land within large urban areas.
This new policy is not without controversy. Many suggest that there are too many loopholes allowing foreign buyers to effectively bypass this legislation. Others say that even if the laws are effective, it is too little too late?Many also wonder if the consequences for breaking the law are too soft. Every non-Canadian who breaks the law and helps a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited from purchasing the residential property is guilty of an offence and liable on summary conviction to a fine of not more than $10,000. Will 10K be enough to deter people from breaking the law? If not, does Canada have the resources to effectively enforce the law?
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