Foreign Buyers Tax in Canada: BC and Ontario Rules

The phrase covers three different taxes, two levels of government and one outright prohibition, and buyers routinely budget for the wrong one. The foreign buyers tax BC charges is a one-time 20% surcharge on the purchase itself, in five named regions only. It is not the annual vacancy tax, it is not the federal ban that may stop the purchase happening at all, and it is not Ontario's very different 25%.

Ask three people in Vancouver what the foreign buyers tax is and you will get three answers, all of them partly right. The confusion is structural rather than careless: four separate measures apply to the same buyer, they were introduced years apart by three levels of government, and the press has called all of them "the foreign buyer tax" at one point or another.

They divide cleanly once you separate them by when they bite. One prohibits the purchase. One is charged once, at closing. Two are charged every year you own the property. Budgeting for the wrong category is how a purchase that looked affordable turns out not to be.

The prohibition is federal, and it is the one that decides whether the rest of the list is even relevant. The one-time charge is provincial: BC's Additional Property Transfer Tax, Ontario's Non-Resident Speculation Tax, and in Toronto a municipal tax on top. The annual charges are BC's Speculation and Vacancy Tax and, in the City of Vancouver, a separate municipal empty-homes bylaw.

A fifth measure, the federal Underused Housing Tax, sat in the annual column until recently and no longer does for current years — though it has a tail that still catches people, covered further down. Treat this page as a map of which questions to ask rather than a quote: the answer for any specific purchase depends on the buyer's status, the property's location and what the property will be used for, and those three facts interact.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into force at the start of 2023 and was originally set to lapse two years later. In February 2024 the federal government announced a two-year extension, so the prohibition and its regulations now run until January 1, 2027. Until that date, a non-Canadian generally may not purchase residential property in Canada at all, which makes the tax question moot for many of the people asking it.

"Generally" is doing real work in that sentence. The Act carries exceptions, and the regulations have been amended since it came into force to widen some of them. Certain temporary residents, refugee claimants and people purchasing with a Canadian spouse or common-law partner fall outside the prohibition, and the geographic scope excludes property outside census metropolitan areas and census agglomerations — which is to say much of the country by land area, though not much of it by population.

The consequence of getting this wrong is not a tax bill. A purchase made in contravention can be unwound by court order on application, with the property sold and the non-Canadian receiving no more than what they paid. That is a materially different risk from a surcharge, and it is why the sequence matters: eligibility first, tax second.

Because the exceptions turn on immigration status, work history and residence — facts that change — this is the part of the analysis that most needs checking against your own circumstances on the day rather than against a general summary. A buyer who was outside the prohibition last year may be inside it this year, and vice versa. If your status is anything other than Canadian citizen or permanent resident, confirm your position before you make an offer, not after.

British Columbia charges property transfer tax on every registered transfer of land. On top of that, a foreign entity buying residential property in a specified region pays an additional property transfer tax of 20% of the fair market value of the residential portion. That surcharge is what people mean by the foreign buyers tax BC applies, and it is charged once, on registration, not annually.

The geography is the part most often got wrong. The additional tax applies only within named regions: Metro Vancouver, the Fraser Valley, the Capital Regional District, the Central Okanagan and the Nanaimo Regional District. A residential purchase by a foreign entity in Prince George, Kamloops or Cranbrook is outside the specified areas and does not attract it. The line is regional-district based rather than city-based, so a property in a small municipality inside Metro Vancouver is captured while a larger city outside those five regions is not.

Twenty per cent of fair market value is a large number in exactly the markets where the tax applies. On a property valued at a million dollars the surcharge alone is $200,000, payable at registration, in addition to the ordinary property transfer tax and every other closing cost. It is not financeable in the way a purchase price is, and it is not refundable simply because the buyer later becomes a permanent resident — the rules around any refund are specific and time-limited, and worth confirming before relying on them.

Because the charge attaches to fair market value rather than to the price agreed, a below-market transaction between related parties does not reduce it. That matters for family transfers, which are one of the more common ways people encounter this tax without expecting to. Our team works with property owners through real estate accounting and with buyers across the province from our Vancouver practice, and family transfers are where the surprises cluster.

The surcharge applies to a foreign national, a foreign corporation, or a taxable trustee. Each of those is a defined term, and the definitions catch arrangements that do not look foreign at first glance.

A foreign national is an individual who is neither a Canadian citizen nor a permanent resident. Immigration status on the day of registration is what counts — not how long someone has lived in Canada, not whether they file Canadian tax returns, and not whether they hold a work permit. A person who has lived and worked in Vancouver for a decade on successive permits is a foreign national for this purpose.

A foreign corporation is broader than a corporation incorporated abroad. A corporation incorporated in Canada can still be foreign for this tax if it is controlled by foreign nationals or foreign corporations, which means the analysis follows the share register rather than the certificate of incorporation. Buying through a Canadian numbered company does not, by itself, change anything.

A taxable trustee is a trustee that is a foreign national or foreign corporation, or a Canadian trustee holding for a foreign beneficiary. That last case is the one that catches families: a Canadian-resident parent holding property in trust for a child studying abroad who has not become a citizen or permanent resident can bring the arrangement inside the definition. If a trust is involved anywhere in the structure, the beneficiaries need looking at, not just the trustee. Trust filing and the property analysis tend to arrive together.

Where a purchase involves several buyers, the tax does not simply apply or not apply to the whole. It follows the interests, which is the subject of the next section.

Two properties of the charge do most of the work in practice. It is charged on fair market value, and it is charged on the foreign entity's proportionate interest.

Proportionate interest means a foreign entity acquiring a 70% interest in a residential property pays the additional tax on 70% of the residential fair market value, not on the whole. That is straightforward arithmetic, and it is the reason mixed-status purchases need the interests settled before registration rather than after. Two spouses buying together, one a citizen and one a foreign national, do not automatically split fifty-fifty for this purpose — the registered interests are what the tax follows.

It is also charged on the residential portion. Where a property is part residential and part something else — a commercial building with apartments above, or acreage with a house on it — the additional tax attaches to the residential component's value rather than to the whole transaction. Apportionment is a valuation question, and one worth doing carefully in advance, because it is the difference between a defensible filing and an assessment.

What the charge is not is a tax on the mortgage, the deposit or the equity contributed. A common misreading has people concluding that a small foreign contribution to a largely Canadian purchase triggers a small tax. It does not work that way: what matters is the registered interest acquired by the foreign entity, not the source of the funds. A foreign parent gifting a down payment to a Canadian child who takes title alone is a different transaction from that parent taking a registered interest, and the two have very different tax outcomes.

Ontario's equivalent is the Non-Resident Speculation Tax, and it differs from BC's in both rate and reach. It began in 2017 at 15% and applied only to the Greater Golden Horseshoe. Effective October 25, 2022 it rose to 25% and became province-wide, so unlike BC there is no map to check: a foreign national, foreign corporation or taxable trustee buying residential property anywhere in Ontario is within scope.

Toronto then adds its own. The city adopted a Municipal Non-Resident Speculation Tax in February 2024, effective for purchases from January 1, 2025, charged at 10% of the full purchase price on foreign buyers of certain residential properties, on top of the municipal land transfer tax the city already levies. Stacked with the provincial 25%, a foreign buyer of a Toronto home faces 35% in speculation taxes before ordinary land transfer taxes are counted at all.

The scope definition in Ontario is worth reading closely because it is drawn by building type: the tax reaches transfers of land containing at least one and not more than six single-family residences. That is a deliberately drawn line, and purchases at the edges of it — a seven-unit building, a mixed-use property — need advice rather than assumption.

The practical comparison for a buyer choosing between markets is less about the headline rate than about certainty. BC's charge is higher-variance: 20%, but only in five regions, so location changes the answer entirely. Ontario's is flat and province-wide at 25%, with a further 10% inside one city. If you are weighing a purchase in both provinces, model the total closing cost rather than comparing rates, and read our note on how these rules land on foreign residents in Toronto alongside the annual property tax picture there.

The purchase surcharge is a single event. The vacancy taxes are the recurring cost, and they are the ones that turn a holding into an expensive one.

British Columbia's Speculation and Vacancy Tax applies annually to residential property in designated taxable areas, and every owner in those areas must file a declaration each year — including owners who owe nothing, which is the point most often missed. The tax is not assessed by default and then appealed; it is charged when a declaration is not made.

The rates rose for the 2026 tax year. Foreign owners now pay 3% of assessed value, up from 2%. Canadian citizens and permanent residents with an empty or underused home pay 1%, up from 0.5%. Alongside the increase the tax credit available to BC residents was raised from $2,000 to $4,000, which for a resident owner offsets the tax on a meaningful band of assessed value. For a foreign owner there is no equivalent shelter, and 3% of assessed value every year compounds quickly against a property that is not producing income.

A separate City of Vancouver empty-homes bylaw applies within that city only, and it is genuinely distinct from the provincial tax: different administration, different declaration, different exemptions. A Vancouver property can be inside both. Owners regularly file one and assume it covered the other.

The exemptions in both regimes turn on use — a principal residence, a tenanted property let on a qualifying basis, a property undergoing substantial renovation, and several life-event cases. Most are available to foreign owners as well as residents, but they must be claimed through the declaration on time. An exemption you qualified for and did not declare is worth nothing.

For several years a federal annual tax on vacant or underused residential property owned by non-resident non-Canadians sat on top of the provincial vacancy taxes, with a separate annual return that caught a very large number of owners who ultimately owed nothing.

That has now changed, and the change is more nuanced than "it is gone". Bill C-15 received Royal Assent on March 26, 2026, ending the Underused Housing Tax in respect of the 2025 calendar year and all future years — no return to file, no tax to pay. The Act itself stays on the books in dormant form, with full repeal of the Act and its regulations taking effect on January 1, 2035.

The tail is the part that still costs money. Filing, payment and penalty obligations for the 2022, 2023 and 2024 calendar years remain fully in effect. An owner who never filed for those years is not relieved by the ending of the tax, and the penalty structure for a missed return under that regime was severe relative to the tax at stake — which was the original complaint about it. If you owned Canadian residential property through a corporation, a partnership or a trust in any of those three years, that question is still live, and it is worth settling deliberately rather than hoping it lapses.

This is exactly the kind of rule where a page written eighteen months ago will confidently tell you the wrong thing, so check the date on anything you read about it — including this page. It is current as at August 2026.

Renting the property is the most common way to step out of the vacancy taxes, and it steps into a different regime instead. Rent paid to a non-resident of Canada is subject to withholding at source, and the default is unkind: tax is withheld on the gross rent, before mortgage interest, property tax, repairs, insurance or management fees. On a property running at a thin margin, withholding on gross can exceed the actual profit.

There is a well-established way to fix that, and it has to be done in advance. A non-resident owner can apply, with a Canadian-resident agent who undertakes responsibility, to have withholding calculated on net rental income instead. The application is made on form NR6 before the first rental payment of the year, and it commits the owner to filing a Canadian return for that rental income — form T1159 — by the deadline that follows the year end.

Miss that filing deadline and the election is void retroactively: the CRA can assess on gross rent for the whole year even though withholding was remitted on net. That is the single most expensive mistake in this area, and it is a calendar failure rather than a judgment call.

Filing the return is usually worth it on its own merits even without the net election, because the return is assessed at graduated rates on net income after expenses and capital cost allowance, and the resulting tax is often less than what was withheld on gross — producing a refund. The record-keeping this requires is ordinary bookkeeping, but it has to be kept to a Canadian standard and in a form that supports the expenses claimed.

The exit has its own rule, and it surprises sellers who have complied faithfully for years. When a non-resident disposes of Canadian real property, the purchaser is required to withhold and remit a portion of the proceeds unless the vendor obtains a clearance certificate from the CRA covering the disposition.

The mechanism protects the tax on the gain, and it works by making the buyer liable if the withholding is not done — which is why buyers' lawyers hold back funds firmly and without much negotiation. The vendor applies for the certificate, the CRA assesses the tax on the gain, the vendor pays or secures it, and the certificate is issued. Funds are released against the certificate.

The friction is timing. The application has a deadline tied to the disposition date, and the CRA's processing is not instant. A vendor who begins the process at closing can wait months with a substantial holdback sitting in a lawyer's trust account, and the holdback is calculated on the proceeds rather than the gain — so it can far exceed the tax actually owing. Starting the application before the transaction closes is the difference between a short holdback and a long one.

A separate return for the year of disposition then reports the gain and reconciles what was withheld against what is owed, frequently producing a refund. None of this is difficult work, but all of it is deadline-driven, and it belongs in the plan before the property is listed rather than after an offer is accepted. Where the property was rented, the disposition analysis also has to account for any capital cost allowance claimed along the way.

The instinct to hold property through a company is strong and it is often right for reasons that have nothing to do with these taxes — liability, succession, co-ownership between unrelated parties. What it does not do is avoid the foreign buyer surcharges, because both the BC and Ontario definitions look through to control and to beneficiaries rather than stopping at the incorporation certificate.

A Canadian-incorporated company controlled by foreign nationals is a foreign corporation for BC's additional tax. A Canadian trustee holding for a foreign beneficiary is a taxable trustee. Structures that were assembled for perfectly ordinary commercial reasons can therefore attract the surcharge without anyone having intended a foreign purchase at all, and the point to check is the same in both provinces: who controls, and who benefits.

Holding through a corporation also changes the annual picture. Corporate ownership brings a corporate filing obligation whether or not the property produces income, and the vacancy declarations still have to be made in the corporation's name. The Underused Housing Tax tail discussed above lands especially hard here, because corporate and trust owners were within its filing net for 2022 through 2024 even when they owed nothing. If a company or trust holds Canadian residential property, those three years are worth checking now.

Whether a structure earns its keep is a question about the whole position rather than about the property alone, and it is the kind of thing our tax planning and corporate tax work is built around. Cross-border ownership adds a second country's rules to the same question — the treatment at home of Canadian rental income, of the Canadian tax paid on it, and of the eventual gain — which is where cross-border tax advice earns its fee.

Several widely held beliefs about the foreign buyer taxes are simply wrong, and each of them costs money in a different direction.

They do not apply to citizens or permanent residents. A Canadian citizen living abroad — even one who has not been in Canada for twenty years and files no Canadian return — is not a foreign national for the purchase surcharges. Non-residence for income tax purposes and foreign status for these taxes are different tests, and conflating them leads people to budget for a surcharge they do not owe. The annual vacancy taxes are the other way round: those can reach a citizen who leaves a home empty.

They do not apply to commercial property. These are residential measures. A foreign entity buying an office building, a warehouse or a farm is outside them, though the residential portion of a mixed property is not.

They are not avoided by paying cash, by using a nominee, or by taking an unregistered interest. The definitions follow registered interests, control and beneficial entitlement, and arrangements built to obscure any of those are the ones that attract scrutiny rather than the ones that escape it.

And they do not stack in the way people fear across provinces. Each provincial surcharge applies to property in that province. Owning in both BC and Ontario means two separate analyses, not a combined rate. Where the real stacking happens is within one jurisdiction — Ontario's 25% plus Toronto's 10% — and inside the annual column, where a Vancouver property can face both the provincial and the municipal vacancy regimes in the same year.

The order of operations matters more here than the arithmetic, because almost every expensive outcome on this page comes from doing something in the wrong sequence rather than from misunderstanding a rate.

Confirm eligibility under the federal prohibition first, on your status as it stands today. Then fix the property's location against the specified regions — in BC that changes the answer entirely, in Ontario it does not. Then settle the registered interests before completion, because the surcharge follows proportionate interest and interests are far easier to arrange than to rearrange. Then decide what the property will be used for, because that decides the annual column: lived in, rented on a qualifying basis, or empty are three different annual costs.

If it will be rented, the net-withholding election and the Canadian agent go in place before the first rent. If a corporation or trust is involved, the 2022 to 2024 Underused Housing Tax question gets answered rather than assumed. And if a sale is anywhere on the horizon, the clearance certificate application starts before the listing, not at closing.

You can model the income-tax side of a rental year with our personal income tax calculator, and personal filing for a non-resident with Canadian rental income is a fixed-fee engagement like any other.

Where this usually starts

Most people arrive at this page with a specific purchase in mind and one of two questions: whether they are allowed to buy, and what it will cost beyond the price. Those are answerable in a short conversation, because they turn on a handful of facts — status, location, intended use, and whether an entity is involved.

If something on this page is already behind you — an unfiled Underused Housing Tax year, rent that has been withheld on gross, a sale with a holdback sitting in trust — it is ordinary remedial work rather than an emergency, and it gets cheaper the sooner it is dealt with. Our tax accountant led team works with property owners and non-resident buyers remotely across Canada, on a fixed fee agreed before anything begins. Tell us the property and your status and we will tell you what it costs, in a free 15-minute consultation, or call +1 (416) 619-0068.