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[BUYING AND SELLING REAL ESTATE IN CANADA - ONTARIO]
Purchase of Residential Property by Non- Canadians Regulations (the " Regulation "). This Act prohibits non-Canadians (including individuals and individuals using corporations) from purchasing certain residential property anywhere in Canada, for a period of 2 years, with certain exceptions for persons who enjoy protected status or are married to a Canadian. In its 2022 Budget, the Federal Government confirmed that the Act only applies to residential properties in either a "census agglomeration" (area of a core population of 10,000 or more people) or a "census metropolitan area" (metropolitan area with total population of 100,000 or more). Contraventions of this Act may result in the residential property being sold by court order, and/or imposing a fine of up to $10,000 on offenders and those that counsel, induce, aid or abets in the contravention of this Act. On March 27, 2023, the Federal Government announced Regulations Amending the Prohibition on the Purchase of Residential Property by Non-Canadians , which came into force immediately. In particular and of note: • Vacant land can be purchased by non- Canadians and used for any purpose including residential development. • Residential property can be purchased by non-Canadians for development purposes. The federal ban on the purchase of residential property by non-Canadians was extended two years to January 1, 2027, by regulation in February 2024.
XVII. RESIDENTIAL PROPERTY FLIPPING RULE (ANTI-FLIPPING TAX) On January 1, 2023, a new residential Anti- Flipping Tax Rule came into force in Canada. Under the rule, an individual who sells a residence within 12 months of acquiring it will be taxed on the profits from a "flipped property" as business income. Prior to the introduction of this Anti-Flipping Tax Rules, an individual who sold a home which was designated as their principal residence was exempt from paying taxes on any gains, and properties sold that qualified as capital property were taxed at the capital gains inclusion rate. No principal residence exemption is available to reduce the anti- flipping tax. A “flipped property” is defined as a housing unit located in Canada, or a right to acquire a housing unit located in Canada which was owned by the taxpayer for less than 365 consecutive days prior to its disposition. Notably, the right to acquire a housing unit and disposition would apply to an agreement of purchase and sale to buy a pre-construction home which is assigned to another purchaser. Exemptions to the Anti-Flipping Tax Rule apply to Canadians who sell their home within 12 months due to life circumstances, such as disability, death, a new job, the birth of a child, or the breakdown of a relationship. The Federal Government has expressed that exemptions will be set in rules that will be presented for consultation in draft legislation. 1. UNDERUSED HOUSING TAX ACT Effective January 1, 2022, the Underused Housing Tax Act was introduced by the Government of Canada. This act requires individuals who are not Canadian citizens nor permanent residents of Canada who
ILN Real Estate Group – Buying and Selling Real Estate Series
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