Canada has decided to increase the tenure of the ban on foreign home buyers for two more years to address the matter of housing affordability for its own citizens. It means the bank will impact non-Canadian resident Indians too.
The development could discourage Indian investors who may now look elsewhere. They might turn to European nations with greater growth prospects.
The government had barred non-Canadians from acquiring properties in 2022, and the measure expires on January 1, 2025. That date has now been moved to January 1, 2027, The Hindustan Times reported.
“For Indian real estate investors, this extended ban could have several implications including reduced investment opportunities and a shift in their focus on investment. Canada has been a popular destination for real estate investment due to its stable market, strong property rights, and potential for appreciation. The extension of the ban means that Indian investors will have to look elsewhere for investment opportunities or wait until the ban is lifted,” Ashwin Chadha, CEO, India Sotheby’s International Realty, told the daily.
Canada also imposes a Non-Resident Speculation Tax (NRST), paid by foreign buyers to purchase properties in Ontario or in certain British Columbia regions.
A real estate expert told the paper that the NRST is 25% in Ontario and 20% in BC.
“If you are not a permanent resident or citizen of Canada you would pay the tax if you entered into a purchase agreement before January 1, 2023, otherwise the federal/national foreign buyer ban would entirely prevent you unless you fall under one of the exemptions such having a student visa or work permit/visa, this being your first and only home in Canada that you are purchasing (for students the property purchase cannot be greater than $500,000), and you still have at least 183 days remaining on the visa/work permit (regardless if exempt from the ban you would still need to pay the tax),” Jeff Levy, Managing Partner, Levy Zavet Lawyers, informed the daily.
The speculation tax is refundable if one avails of permanent residency. Besides NRST exemptions, a rebate of previously paid NRST should be available on meeting certain criteria. For real estate purchases made on or after March 29, 2022, the Permanent Resident NRST Rebate is the only rebate available.
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