The Foreign Buyer Tax Rules Have Changed - What You Need to Know as A Savvy Foreign Investor in 2023

If you’ve paid attention to the Canadian housing market over the last decade, you undoubtedly know that real estate prices are soaring. In many cases, homes in large cities like Vancouver and Toronto are unattainable for the average middle-class family. In just ten years, home prices have risen 88.3 percent—in fact, prices in October 2020 had risen almost 11 percent from the same time in 2019. That is a stunning figure, especially given the COVID-19 pandemic.

For real estate investors, growing housing prices are a good thing—everyone wants to make a good investment. But can the market continue apace? Conversely, the market is brutal for first-time homebuyers in popular locations. Unlike their parents and grandparents, most newly-minted adults have been priced out of the metropolitan market—where most of the jobs are.

The Canadian government continues to try to solve the housing affordability crisis. While the foreign buyer tax won’t save housing in and of itself, it’s part of a national effort to keep prices more manageable.

But, before we dive into the impact of the new foreign buyer tax rules on how you budget for your upcoming investments, click the link below to book a free strategy call today.

Ontario and British Columbia pioneered the foreign buyer tax

If you’re a foreign buyer, you might already know that Ontario and British Columbia have long since implemented a foreign buyer tax. Ontario levies a 15 percent tax on buying or acquiring an interest in a property in the Greater Golden Horseshoe Region “by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.” This is in addition to the general land transfer tax, which ranges from 0.5 percent to 2.5 percent, depending on how much the property costs. (Some first-time homebuyers may be eligible for a land transfer tax refund.)

British Columbia also has a foreign buyer tax since 2016. They charge 20 percent of the property’s fair market value after February 21, 2018. Like the Ontario tax, it also applies to specific regions in British Columbia: the Capital Regional District, Fraser Valley Regional District, Metro Vancouver Regional District, Regional District of Central Okanagan and the Regional District of Nanaimo. There are limited exemptions—for example, foreign buyers may be exempted from the additional tax if they are either exempt from property transfer tax, a confirmed BC Provincial Nominee or acquiring a property on behalf of a Canadian-controlled limited partnership.

Given the incredible Vancouver and Ontario real estate market, an additional 15 to 20 percent in taxes can be a hefty sum. That has made these areas less desirable for foreign buyers who want to purchase properties to go unused and simply appreciate in value. They can still buy them, but they’ll make a bigger tax contribution.

Discover How To Buy Unlimited Rental Properties With This Step By Step Guide

Plans to make a similar tax-effective nationwide

According to Reuters, the details of the new tax rules should be revealed in March or April. At this point, no one knows whether it will be a similar tax rate to Ontario or British Columbia, nor whether there will be similar exemptions.

The Canadian government stated in their December Fall Economic Statement, “Speculative demand from foreign, non-resident investors contributes to unaffordable housing prices for many Canadians… The government is committed to ensuring that foreign, non-resident owners, who simply use Canada as a place to passively store their wealth in housing, pay their fair share.”

At this point, there isn’t enough data on how much Canadian real estate is owned by foreign buyers, nor how much that has contributed to the increase in real estate prices. However, we do know that many Canadians are fleeing major metropolitan areas in order to buy homes—areas like Toronto and Vancouver are unaffordable for the majority of the country. Toronto’s average home price is $1,022,138 as of July 2020, and Vancouver’s average was about $1,298,332 as of January 2020. Compare that to the average nationwide home price of $531,000 and you can see why there’s such a housing crisis.

What this means for Canadian home buyers and investors

If you’re a Canadian citizen, resident or are buying on behalf of a domestic company, you won’t be subject to the tax. In fact, you might notice that this foreign buyer tax helps level out real estate prices—at least, that’s the government’s goal. The Reuters article states that the Ontario and British Columbia taxes “helped slow speculation and led to some price corrections, though current levels of foreign demand are unclear due to a lack of national statistics on overseas ownership.”

At the same time, the Canadian government is making an effort to expand first time home buyers’ incentives, making it possible for people with average or lower income to afford to buy a home. This is expected to affect Millennials and immigrants in particular. As a result, you may see housing prices drop a bit.

How foreign investments will be affected

If you’re a foreign buyer, the Canadian market might be less appealing, especially if your goal is to let your safe investment sit and gain value. If the national tax is similar to the Ontario and British Columbia taxes, you’ll need to budget 15 to 20 percent in additional funding. For the average home in Vancouver, that’s nearly $200,000 in additional taxes. This will undoubtedly make foreign speculation less attractive to many investors—which is the government’s goal.


As Canada’s real estate prices continue to soar, the government is doing its best to make it more affordable for its own citizens. While this might discourage foreign investors from buying property here, it will certainly help the average Canadian home buyer or real estate investor break into the market. How much the property prices drop—and where—remains to be seen, but it could open up plenty of opportunity for new investors when it goes into effect.

Now that we have explored the impact of the new foreign buyer tax rules on how you budget for your upcoming investments, click the link below to book a free strategy call today.

Canada is Pushing Back Against Foreign Investors: Here's What They're Doing, With Scott Dillingham