Wondering if you can purchase property in Canada as a US citizen? The short answer is yes, but with important restrictions and conditions. Canada’s foreign ownership landscape has changed dramatically since 2023, and understanding these rules is critical before you start house hunting. This comprehensive guide covers everything American buyers need to know about legal requirements, financing options, taxes, and the step-by-step process to acquire Canadian real estate successfully.
Understanding Canada’s Foreign Buyer Ban: What Changed in 2023?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act, enacted on January 1, 2023, fundamentally altered the ability of foreign nationals—including US citizens—to buy property in Canada. Initially set to expire on December 31, 2024, the Canadian government announced an extension in February 2024, extending the ban through January 1, 2027.
This federal legislation prevents non-Canadians from directly or indirectly purchasing residential properties in Canada’s largest urban centers. The law applies specifically to Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs), which are regions with populations of 100,000 or more. The ban targets residential properties with three or fewer dwelling units, including single-family homes, semi-detached houses, townhomes, and condominium units.
The primary goal of this ban is to stabilize Canada’s overheated housing market and make homes more affordable for Canadian citizens and permanent residents. However, the legislation does include specific carve-outs and exceptions that allow some US citizens to purchase property under certain circumstances. Violating the prohibition can result in fines up to $10,000 CAD and a court-ordered forced sale of the property.
Who Can Buy: Exceptions to the Foreign Buyer Ban
Despite the broad restriction, several categories of people are exempt from Canada’s foreign buyer ban, and understanding which exemptions apply to you is essential before beginning your search.
Temporary Workers with Valid Work Permits
US citizens holding valid work permits with at least 183 days of remaining validity can purchase one residential property in restricted areas (CMAs and CAs). However, work permit holders must have filed Canadian income tax returns for at least three of the four years preceding the property purchase. This exception recognizes workers who have established significant connections to Canada’s economy and are contributing through employment.
International Students
International students enrolled in authorized study programs may qualify to purchase residential property under specific conditions. These include filing Canadian tax returns, maintaining valid study permits, and typically limiting purchases to properties under $500,000 CAD. This exemption acknowledges students who are building long-term ties to Canadian communities.
Properties Outside Metropolitan Areas
Any non-Canadian, including US citizens, can purchase residential property located outside of CMAs and CAs. This includes rural areas, small towns, and regions with populations under 100,000. Many beautiful properties in Canada exist in these jurisdictions, offering opportunities for Americans seeking vacation homes or investment properties without facing the federal ban’s restrictions.
Recreational Properties and Vacation Homes
The ban specifically exempts cottages, lake houses, and other recreational properties. Vacation properties are not classified as restricted residential property, making them accessible to US buyers regardless of location. This allows Americans to invest in seasonal homes across Canada without federal restrictions.
Multi-Unit Buildings
Buildings with four or more dwelling units fall outside the ban’s scope. Americans can legally purchase apartment buildings, multi-family residences, or condominium complexes with multiple units without encountering federal restrictions. These properties are treated as commercial investments rather than restricted residential real estate.
Properties Purchased Through Inheritance or Divorce
The ban includes exceptions for properties acquired through inheritance, divorce, or separation. If you inherit a Canadian property or receive one as part of a divorce settlement, the prohibition does not apply. Additionally, spousal or common-law partner exceptions allow non-Canadians to purchase residential property jointly with a Canadian citizen or permanent resident.
Development Exceptions
Non-Canadians purchasing property specifically for development or new housing construction may qualify for exemptions. This applies particularly to vacant residential land outside metropolitan areas designated for development purposes. The exemption encourages foreign investment in addressing Canada’s housing shortage.
Provincial and Municipal Taxes: Additional Foreign Buyer Costs
Beyond the federal prohibition, several provinces and municipalities impose significant additional taxes on foreign property buyers. These surcharges can dramatically increase your total acquisition costs and must be factored into your purchase budget.
Ontario’s Non-Resident Speculation Tax (NRST)
Ontario charges a provincial Non-Resident Speculation Tax (NRST) of 25% on all residential property purchases by foreign nationals. This applies province-wide to any property purchase where the buyer is a non-Canadian citizen or permanent resident. The tax is calculated as 25% of the property’s purchase price and is due at closing.
Additionally, starting January 1, 2025, Toronto introduced a municipal Non-Resident Speculation Tax (MNRST) of 10% on top of the provincial 25% tax. This means foreign buyers in Toronto face a combined 35% surcharge on residential property purchases before accounting for regular land transfer taxes and municipal land transfer taxes.
For example, a $500,000 CAD property in Toronto would incur:
- Provincial NRST: $125,000 (25%)
- Municipal MNRST: $50,000 (10%)
- Regular closing costs and taxes
- Total additional cost: $175,000 CAD
Important: Ontario offers a NRST Rebate if you become a Canadian permanent resident within four years of purchase, own the property individually or jointly with your spouse, and occupy it as your principal residence within 60 days of closing.
British Columbia’s Additional Property Transfer Tax (APTT)
British Columbia charges a 20% Additional Property Transfer Tax on foreign buyer purchases in designated regions:
- Metro Vancouver Regional District
- Capital Regional District
- Fraser Valley Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
This 20% tax applies to foreign nationals, foreign corporations, and taxable trustees. Additionally, BC imposes a Speculation and Vacancy Tax (SVT) if the property is not your principal residence and is not rented for at least six months annually. Foreign owners face a 2% SVT in 2025 (increasing to 3% in 2026), while Canadian citizens pay only 0.5%.
Other Provinces and Municipalities
While Ontario and BC impose the most substantial foreign buyer taxes, other provinces and municipalities may charge additional land transfer taxes or municipal levies. Alberta and many other provinces do not currently impose specific foreign buyer taxes, making them potentially more attractive for US investors seeking cost-effective entry points.
Can You Get a Mortgage? Financing Your Canadian Property Purchase
Yes, US citizens can obtain mortgages in Canada, but the process differs significantly from US home financing and involves stricter requirements, higher down payments, and specialized lenders.
Down Payment Requirements for Non-Residents
As a non-resident foreign buyer, you’ll typically need to provide a minimum down payment of 35%. This is substantially higher than the 20% often required for Canadian residents and reflects lenders’ perception of increased risk when dealing with non-resident borrowers. Some specialized lenders may consider 30% down payments, but 35-40% is standard practice.
Required Documentation and Income Verification
To qualify for a Canadian mortgage with US income, you must provide:
- Two valid government-issued photo IDs for FINTRAC identity verification
- Recent W-2 forms and IRS tax returns (typically two years) proving consistent US income
- Bank statements demonstrating proof of funds for down payment and closing costs
- Employment verification letter from your US employer
- US credit history or reference letter from your US bank
- Mortgage pre-approval from a Canadian lender before making an offer
- Property appraisal and inspection reports
- Homeowners insurance quote
Lenders evaluate your Gross Debt Service (GDS) ratio (typically capped at 39%) and Total Debt Service (TDS) ratio (typically capped at 44%) to determine mortgage affordability. They’ll also account for currency exchange rate fluctuations when assessing foreign income stability.
Canadian Lenders Accepting US Income
Several Canadian banks and alternative lenders work with US citizen borrowers using US income:
- TD Bank: Offers non-resident mortgage programs with consideration for US income documentation
- RBC Royal Bank: Provides mortgages for non-residents with appropriate income verification
- Home Trust: Specializes in alternative lending for cross-border borrowers
- Equitable Bank: Flexible solutions for foreign income earners
- Glasslake Funding: Tailored mortgage options for cross-border clients
- HSBC: Offers premier services for high-net-worth US clients
Currency Fluctuations and Exchange Rates
A critical consideration when financing with US income is currency exchange rate risk. If the US dollar weakens against the Canadian dollar, your mortgage payments (in CAD) effectively increase in dollar terms. Many lenders build in safety margins when calculating affordability to account for potential currency fluctuations. Consider consulting with a cross-border financial advisor about hedging strategies.
Building Canadian Credit History
While some lenders accept US credit history, establishing a Canadian credit profile strengthens your mortgage application. You can:
- Open a Canadian bank account and maintain regular deposits
- Obtain a secured Canadian credit card
- Build a credit history in Canada before applying for the mortgage
- Include a Canadian co-applicant if possible
Property Taxes and Annual Costs of Ownership
Once you’ve purchased Canadian property, understanding annual property taxes is essential for budgeting. Property taxes vary significantly by province and municipality.
How Canadian Property Taxes Work
Canadian property taxes are calculated as: Property’s Assessed Value × Local Tax Rate (Mill Rate)
A government assessor determines your property’s market value every few years, considering location, size, condition, and recent comparable sales. Each province sets its own assessment framework, and municipalities collect taxes based on rates they establish.
Property Tax Rates by Province
Property tax rates across Canada vary dramatically:
- Toronto, Ontario: Approximately 0.29% of assessed value (2024 rate)
- Ontario average: Around 0.75% for residential properties
- Vancouver, BC: Approximately 0.3-0.4% of assessed value
- Winnipeg, Manitoba: 2.72% of assessed value (highest in Canada)
- Alberta: Generally 0.4-0.6% range
- Nova Scotia: Approximately 0.8-1.2% range
Example: An $800,000 CAD condo in Toronto would have approximately $2,320 CAD in annual property taxes ($800,000 × 0.29%). The same property in Winnipeg would cost $21,760 CAD annually—demonstrating the importance of location research.
Additional Annual Taxes for Non-Residents
Beyond standard property taxes, you may face additional levies:
- Ontario’s Underused Housing Tax: 1% annually on vacant or underused residential property (for non-residents and non-Canadian owners)
- BC Speculation and Vacancy Tax: 2% in 2025 (3% starting 2026) for foreign owners
- Condo fees: If applicable, typically $200-600 CAD monthly
- Property insurance: Required if mortgaged, typically $800-2,000 CAD annually
- Maintenance and utilities: Variable based on property type and location
Step-by-Step Process: How to Buy Property in Canada as a US Citizen
Step 1: Verify Your Eligibility
Confirm whether you qualify for an exception to the federal foreign buyer ban based on your employment status, family situation, or property location. Consult with a Canadian real estate lawyer to ensure your specific circumstances comply with current regulations—regulations change, and professional guidance is invaluable.
Step 2: Get Pre-Approved for Financing
Contact Canadian lenders before beginning your property search. Provide your US income documentation, down payment proof, and financial information. Pre-approval strengthens your negotiating position and clarifies your budget limits.
Step 3: Hire a Canadian Real Estate Agent and Lawyer
Engage a licensed real estate agent familiar with foreign buyer regulations in your target province. Simultaneously, retain a Canadian real estate lawyer to:
- Verify your identity under FINTRAC rules
- Conduct title searches and confirm property ownership history
- Review all legal documentation
- Ensure compliance with foreign buyer regulations
- Perform due diligence on the property
Step 4: Search and Make an Offer
Work with your agent to identify properties matching your criteria. When you find a property, your agent prepares an Agreement of Purchase and Sale with conditions appropriate for foreign buyers. Conditions typically include:
- Satisfactory property inspection
- Successful mortgage financing approval
- Title search completion
- Removal of any other contingencies
Step 5: Provide Deposit and Satisfy Conditions
Upon offer acceptance, provide a deposit (typically 1-5% of purchase price) within 24-48 hours. This deposit is held in trust under the contract. Complete all conditions:
- Schedule and complete property inspection
- Finalize mortgage approval with your lender
- Obtain property appraisal
- Complete lawyer’s title due diligence
Step 6: Calculate Total Closing Costs
Closing costs for foreign buyers typically include:
- Land transfer taxes: Varies by province, typically 1.5%-4% of purchase price
- NRST and municipal taxes: 25% in Ontario (plus 10% in Toronto), 20% in BC designated areas
- Lawyer’s fees: $1,500-4,000 CAD depending on complexity
- Property inspection: $400-600 CAD
- Title insurance: $200-500 CAD
- Property appraisal: $300-500 CAD
- Property insurance (first year): $800-2,000 CAD
- Mortgage insurance: Not available for non-residents; must provide 35%+ down payment
Important: Budget for 40-50% of the purchase price in total closing costs when you’re a foreign buyer, accounting for the substantial foreign buyer taxes and surcharges.
Step 7: Final Walk-through and Closing
Conduct a final walk-through 24-48 hours before closing to confirm the property condition hasn’t changed. Sign closing documents prepared by your lawyer. Funds are transferred, title is registered in your name, and you receive keys to your new Canadian property.
Step 8: Post-Closing Obligations
After closing:
- Register your property with provincial land titles office
- Apply for a CRA Individual Tax Number (ITN) if you expect rental income or must file Canadian tax returns
- Arrange property insurance with a Canadian provider if not already done
- Set up property tax payments with your municipality
- File your tax return with the Canada Revenue Agency for the year of purchase if you earn rental income
Tax Implications for US Citizens Owning Canadian Property
As a US citizen owning Canadian real estate, you face tax obligations in both Canada and the United States. Understanding these overlapping requirements is critical for compliance.
Reporting Rental Income
If you rent out your Canadian property, you must report rental income to both the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS). Canadian rental income is subject to Canadian tax rates (top marginal rates around 43-54% depending on province). You can claim deductions for:
- Mortgage interest
- Property taxes
- Property insurance
- Condo fees
- Utilities and maintenance
- Advertising for tenants
- Property management fees
Capital Gains Taxes on Sale
When you sell your Canadian property, you’ll incur capital gains taxes in both countries:
In Canada: One-half of capital gains are subject to Canadian tax (50% inclusion rate). Maximum rates on capital gains are approximately 21-27% depending on province.
In the United States: 100% of capital gains are subject to US tax. The IRS requires US citizens to report worldwide real property gains. You can claim a foreign tax credit for Canadian taxes paid to reduce your US tax burden.
Section 216 Withholding
When selling Canadian property as a non-resident, the buyer’s lawyer must withhold 25% of the net capital gain (or 50% of gross proceeds in some cases) and remit it to the CRA. This ensures you comply with Canadian tax obligations even if you return to the US.
FATCA and Foreign Property Reporting
US citizens must file FATCA (Foreign Account Tax Compliance Act) reporting for Canadian property interests. If your Canadian property is worth over $200,000 USD (or $300,000+ including other foreign assets), you may need to file Form 8938 (Statement of Specified Foreign Financial Assets) with your US tax return.
Essential Documents for US Citizens Buying Canadian Property
Gather these documents before beginning your property purchase:
- Two valid government photo IDs (passport, driver’s license, or state ID)
- Proof of funds: Recent bank statements showing down payment amount
- Income documentation: Pay stubs, W-2 forms, and two years of IRS tax returns
- Employment verification letter from your US employer
- US credit report or reference letter from your US bank
- Work permit or study permit (if claiming employment or student exemption)
- Proof of residency if applicable
- Marriage certificate or common-law partner documentation (if applicable)
- Birth certificate for identity verification
- Tax identification number (your US Social Security Number)
- CRA Individual Tax Number (ITN) if already obtained
Your Canadian lawyer and lender will provide detailed checklists specific to your situation, as requirements vary based on province, property type, and your immigration status.
Key Takeaways: Can a US Citizen Buy Property in Canada?
Yes, US citizens can buy property in Canada, but the process is more complex than for Canadian citizens, involving federal restrictions, provincial taxes, higher down payments, and specialized financing. Your ability to purchase depends on:
- Whether the property qualifies for an exception to the federal ban (outside metropolitan areas, multi-unit buildings, recreational properties, or through permitted exemptions)
- Your immigration status (work permit holders with Canadian tax history, international students, or those with Canadian family connections may have more flexibility)
- Your financial capacity to cover 35%+ down payments plus 25-50% in closing costs including foreign buyer taxes
- Your willingness to navigate complex cross-border tax obligations in both Canada and the United States
- Your commitment to engaging professional advisors (real estate agents, lawyers, and accountants familiar with cross-border transactions)
The Canadian real estate market offers excellent opportunities for US investors willing to understand the regulatory landscape. With proper planning, appropriate professional guidance, and realistic expectations about costs and timelines, Americans can successfully become Canadian property owners.
Next Steps
- Consult with a Canadian real estate lawyer in your target province
- Contact Canadian lenders to understand mortgage options with your US income
- Verify your exemption status under the foreign buyer ban
- Engage a US tax advisor familiar with Canadian property ownership
- Research specific provincial regulations in your target location
- Begin your property search with a qualified real estate agent experienced with foreign buyers
The key to successful cross-border real estate investment is preparation, professional guidance, and understanding the unique regulatory environment in Canada’s evolving housing market.
Disclaimer: This article provides general information about buying property in Canada as a US citizen. Real estate laws, tax regulations, and lending requirements change frequently. Always consult with qualified legal and financial professionals in Canada and the United States before making property purchase decisions. This information is current as of January 2026 but should be verified with professional advisors for your specific situation.
