The Government of Canada has announced a two-year extension to an existing ban on foreign ownership of Canadian housing. The Prohibition on the Purchase of Residential Property by Non-Canadians Act Act was set to expire at the end of 2024, it will now be extended to January 1, 2027.
The Rosseau Group Inc. Rosseau was a real estate developer. Rosseau entered into an agreement of purchase and sale with 2528061 Ontario Inc. to buy land for development purposes. Once the land had been rezoned and subdivided, Rosseau planned to sell the serviced lots. At trial, it was estimated that Rosseau would make a profit of around C$10 million to C$12 million dollars from the sale of the serviced lots. The vendor failed to close, and the land had gone up in value since the agreement of purchase and sale was signed.
We all take real property purchase agreements seriously. We read only the title and we know that a transaction is likely to occur, perhaps a significant one. We can also reasonably expect that there will be a property, a price, a timeline, probably some representations and warranties, and perhaps conditions to be satisfied. But an option to purchase a property? Well, that just doesn t sound quite as important now does it? After all, if something is optional it might not even be needed, or it might never exist. It certainly doesn t seem to warrant as much attention as an agreement to purchase so perhaps no great amount of attention should be paid to it?
On December 2, 2022, the Privy Council passed an Order in Council confirming regulations related to the Prohibition on the Purchase of Residential Property by Non-Canadians Act the Act. The Prohibition on the Purchase of Residential Property by Non-Canadians Regulations the Regulation was published on December 21, 2022, in the Canada Gazette. The Regulation will come into force on January 1, 2023, along with the Act.
The federal government s Underused Housing Tax Act the Act and the associated Underused Housing Tax Regulations both took effect on January 1, 2022. With the first filing and remittance deadline fast approaching, it is important for all residential property owners to consider whether the Act applies to them and what they need to do if it does.