Can Americans Buy Property in Canada?

By Ben Van Dyk, Realtor / Certified International Property Specialist with Real Estate Centre.

With more flexible remote work options more and more Americans are looking to buy property abroad. While many first-time buyers may not want to venture off too far from home, one of the most convenient options seems to be Canada.

Canada's diverse landscape, with vast forests, majestic mountains, serene lakes, and sprawling prairies, offers an idyllic setting for homebuyers. Whether seeking the tranquility of nature or the vibrant energy of urban life, Canada provides a perfect backdrop for any lifestyle. The blend of natural beauty and modern amenities makes it a highly attractive destination for those looking to find their dream home.

Can Americans buy property in Canada?

U.S. residents are able to easily purchase and own property in Canada without needing to become Canadian citizen or resident. Here’s more of what you need to know if you’re interested in buying a property in Canada.

Property Ownership and Residency Requirement

American citizens are permitted to buy property in Canada. Property ownership doesn’t affect the residency status, and there’s no requirement for foreigners to be Canadian residents. In other words, even if you own a property in U.S., you can still invest in real estate in Canada.

Financing Your Purchase

Many Canadian banks also offer mortgages and home equity loans with similar financing terms to what is practiced in the U.S. It is important to mention that the terms may vary, and you might need to provide a larger down payment than Canadian citizens. Also, there’s a possibility that some lenders might require proof of income and/or financial stability. Also, they will need to report income or proceeds from selling their property to taxing authorities in both countries (the IRS and the Canada Revenue Agency or the CRA).

U.S. buyers are also eligible for home equity loans and lines of credit offered by various Canadian financial institutions, although there still might be some difference in the terms compared to those in the U.S. Therefore, it’s better to consult with a financial advisor or mortgage broker familiar with cross-border transactions, to better understand the specific requirements and available options.

Buying property in Canada won’t get you eligibility to become a Canadian citizen. However, if you’ve worked in Canada and/or have temporary resident status, you can easily purchase a property.

Canadian Property Laws

With the new foreign home ownership ban – formally known as Prohibition on the Purchase of Residential Property by Non-Canadians Act went in commencement, many home buyers reconsidered their decision. Here is what you need to know about this and how it can affect your purchase.

Scope and Application of the Ban

The idea of this law is to address housing affordability and availability in certain areas by restricting foreign investments in residential properties. But the truth behind it is that this ban only applies to properties in a census-defined metropolitan area and a census-defined agglomeration, according to CMCH – Canadian Mortgage and Housing Corporation.

-       Geographical Scope: The ban applies to properties located within census-defined metropolitan areas, and census-defined agglomerations. This prohibition is focused only on properties in large urban areas, as well as the surrounding regions.

-       Metropolitan Area: A census-defined metropolitan area has a population of at least 100,000 people with at least 50,000 people living in its core. In other words, these are big cities with significant economic activity, like Vancouver, Toronto, and Montreal.

-       Agglomerations: Defined as a place with at least 10,000 population, or smaller urban areas with significant population and located around a core city, like Victoria and Kwlowna.

Exemptions and Special Cases

The ban doesn’t apply uniformly to all types of residential property purchases by non-Canadians. Here are several exemptions and special cases under this legislation:

·       Temporary Residents: Individuals who hold valid work or study permits may be exempt from the ban under certain conditions.

• International Students: Students enrolled in Canadian institutions may be allowed to purchase property, provided they meet specific criteria, such as the duration of their study and the value of the property.
• Refugees and Protected Persons: Those who have been granted asylum or similar protected status in Canada may also be exempt.
• Multi-Unit Properties: In some cases, the purchase of multi-unit residential properties may be exempt, particularly if the property is intended for rental purposes.

Therefore, the prohibition doesn’t apply to purchasing land outside these areas. Farms, ranches, vacation homes, cottages, and similar properties can be purchased by American citizens without any restrictions.

Taxation for non-Canadian permanent residents or citizens

Here's a summary of the 183-day rule and tax implications for U.S. residents in Canada:

1. 183-Day Rule for Tax Residency: The 183-day rule states that if you spend less than 183 days in Canada in a calendar year, you are generally not considered a resident of Canada for tax purposes. As a result, you will only be taxed on income earned within Canada, not on your worldwide income.
2. Full-Time Residents: U.S. residents living full-time in Canada are considered Canadian residents for tax purposes and are required to file Canadian tax returns, reporting their worldwide income. They are also required to continue filing U.S. tax returns, as the U.S. taxes its citizens and residents on their worldwide income regardless of where they live.
3. Dual Taxation and Treaty Benefits: Full-time residents may be subject to taxes in both countries. However, the U.S.-Canada Tax Treaty and available foreign tax credits help mitigate double taxation on the same income.
4. Specialized Tax Planning: Due to the complexities of navigating both Canadian and U.S. tax systems, it is highly recommended that U.S. residents in Canada seek specialized tax advice. This is especially important for planning investments, retirement accounts, and understanding the implications of cross-border income and financial reporting requirements.

Proper tax planning ensures compliance, minimizes tax liabilities, and leverages treaty benefits for optimal financial outcomes when living and investing across borders.

Purchasing farmland in Canada for Non-Canadians

Non-Canadians, including those without permanent resident status or Canadian citizenship, face varying restrictions on purchasing property in Canada, depending on the province.

1. Provincial Restrictions:

• In British Columbia and Ontario, restrictions on purchasing property are minimal or non-existent, making it relatively easier for non-Canadians to buy land.
• In other provinces, such as Saskatchewan, Alberta, and Manitoba, there are restrictions on the amount of land that can be purchased, typically limited to 20 acres. Similar restrictions exist in the Maritime provinces.

1. Special Considerations:

• Alberta: Non-Canadians can potentially acquire land through co-ownership in a corporation, provided they have a minority interest or meet exemption criteria.
• Saskatchewan and Manitoba: Land purchases by non-Canadians over 20 acres are usually only possible through government exemptions.

1. Specialized Guidance:

• Given the complexity of regulations, prospective buyers should work with specialized real estate agents or brokers familiar with foreign investment rules in Canada. Consulting with tax advisers and lawyers who specialize in cross-border real estate transactions is crucial to ensure compliance and optimize the purchasing process.

1. Expert Support:

• Brokerages that focus on immigration and investment can provide expert guidance on navigating regulations, taxes, and legal implications, helping non-Canadian investors make informed decisions when purchasing property in Canada.

Each situation is unique, so seeking professional advice tailored to individual circumstances is essential when investing in Canadian real estate as a non-resident.

Purchase Your Next Property in Canada

As an American citizen, you can buy property in Canada and enjoy many of the same benefits as Canadian buyers, including real estate opportunities and access to various types of financing. While property ownership doesn’t affect immigration status, it can be a valuable asset and investment.

Purchasing a property is not an everyday event and can come with complexities, especially when buying cross-border. Therefore, it’s crucial to consult with a real estate agent from the country you’re interested in investing in, to navigate all regulations effectively and make informed decisions. We are here to assist you and help you find the best real estate agent to guide you through your next cross-border real estate investment. Head to our Canada land page, explore available properties, and take your investing to another level!