Buying a home in Canada made easier for foreign workers

The Canadian government has made it easier for newcomers, including non-Canadians, to purchase residential property. Recently, the government announced that it would reduce some of the restrictions imposed by the Prohibition on the Purchase of Residential Property by Non-Canadians Act. In addition, financial institutions can now offer tax-free first-home savings accounts, effective from April 1, 2023. Here are the key changes:

Restrictions Reduced for Non-Canadian Homebuyers

The government has eased the restrictions on non-Canadians purchasing residential property, just months after introducing a new law that prohibits them from doing so. Under the amended Act, non-Canadians on a work permit can now purchase mixed-use residential and commercial land if they meet certain criteria. The Canada Mortgage and Housing Corporation (CMHC) has stated that work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase, and they have not already bought more than one residential property in Canada.

Proof of tax filings no longer required

The previous requirements for filing income tax returns and having work experience in Canada have been repealed.

Requirements for Work Permit Holders:

Temporary residents in Canada on a work permit can now purchase a home without the previous restrictions. However, the following criteria must be met:

• Worked in Canada for a minimum of three years within the four years preceding the year in which the purchase was made
• Worked full-time as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations (IRPA)
• Not have purchased more than one residential property.

First Home Savings Account

The new Tax-Free First Home Savings Account (FHSA) is now available for Canadians. It was initially proposed in the 2022 federal budget, and financial institutions can start offering the plan to customers from April 1, 2023. The plan allows prospective first-time homebuyers to save up to $40,000 on a tax-free basis. The maximum annual contribution to the account is $8,000, which is tax-deductible. Withdrawals made to purchase a first home are non-taxable, similar to a Tax-Free Savings Account.

To be eligible for an FHSA, participants must be Canadian residents, 18 years or older, and first-time homebuyers. The account may stay open for 15 years or until the end of the year when a participant turns 71, or at the end of the year following the year in which a qualifying withdrawal is made for the first home purchase, whichever comes first. The government estimates that the FHSA will provide $725 million in support over the next five years.

Price of Housing in Canada

Data from the Canadian Real Estate Association (CREA) shows that the national average home price was $662,437 in February 2023, down 18.9% from the all-time record in February 2022. National home sales were up 2.3% month-over-month since February, although the number of newly listed properties dropped almost 8% in the same period. Home prices vary across Canada, with higher borrowing costs leading to cooling prices in more expensive markets within Ontario and British Columbia. Prices remain steady in Alberta, Saskatchewan, and Newfoundland and Labrador, while Quebec and the Maritime provinces have prices in between. The national average home price is forecasted to decline 5.9% annually in 2023