There are four amendments to the somewhat-controversial foreign ownership ban — officially called the “Prohibition on the Purchase of Residential Property by Non-Canadians Act: — that went into effect on January 1.
They are:
1. Real estate investment is only considered “foreign” if more than 10 per cent of the company doing the development is owned by non-Canadians. The law was previously limited to three per cent.
2. Non-Canadians are entitled to purchase residential property if it’s for the purpose of development, so long as development does not include “the mere purpose of leasing or renting the property out to tenants or otherwise managing it as a rental property as part of its portfolio.” In other words, a new residential property is required. Previously, this was not allowed.
3. Non-Canadians are entitled to buy vacant land that’s zoned, at least in part, for residential use. This is also an addition to the original law.
4. Purchasing a residential property is now legal if individuals hold a work permit with at least six months remaining on it. This exemption was modified from one stipulation non-Canadians had to have filed Canadian income tax returns in at least three of the previous four years.
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Last month’s Federal Budget also included ratifying the new Tax-Free First Home Savings Account, which went into effect on April 1. Until that date, the legislation had been only proposed. It is designed to help Canadians save for their down payments on a first home as the price of housing increases.
To that end, first-time home buyers can save up to $40,000 in an account that can now be opened. When the time comes to apply the money to a down payment, the savings will be tax-free. The $40,000 limit means up to $8,000 per year for five years.
Qualifying as a first-time home buyer (18 years or older) is defined by the Federal Government this way: “…at any time in the calendar year before the account is opened or at any time in the preceding four calendar years, you did not live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence.”
It also applies to joint ownership, and to a spouse or common-law partner.