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In the Vancouver area, for example, many properties have risen by hundreds of thousands of Canadian dollars in a few months.
Although real estate transactions in many Canadian cities have slowed or even fallen to varying degrees in recent months due to a series of measures taken by the Canadian government, especially under the influence of interest rate hikes by the central bank, overall house prices are still in a relatively high position, so affordable housing is still a problem.
In this context, the Canadian Budget implementation Act of 2022 (Cmur19 Act) can be said to have emerged as the times require.
On June 23, 2022, the Federal Government’s Budget implementation Act of 2022 (that is, Cmur19 Act) passed the House of Lords by a vote of 56 to 16 without any amendment, and became law with the Royal Authorization (RoyalAssent).
The bill includes a number of high-profile elements, such as the announcement of changes to the real estate capital gains tax (CapitalGain Tax) rules.
The value-added portion of the sale and purchase of “principal residence” (Principal Residence) under the original rules are generally exempted from VAT, and the new rules make it “necessary” for “foreigners” (who are neither Canadian citizens nor permanent residents of Canada) to pay real estate capital gains tax, which means that even if there is evidence that the houses bought by foreigners are indeed “primary residence”, it is almost impossible to obtain a capital gains tax exemption in the future.
On the other hand, the content related to mortgage and interest rate is also valued by professionals.
The effective dates of the provisions in the new rules are different, such as the “stress test” clause is from October 17, the threshold for new home loans is from November 30, and the real estate capital gains tax exemption for foreigners is cancelled. it will be really reflected in next year’s tax season. The aim is to try to force foreigners to declare the price difference they get from buying and selling houses, thus helping to “plug tax loopholes” and cool “frequent home sales”.
However, it is undeniable that the most important part of it is the ban on foreign buyers buying more houses.
In fact, as early as early April this year, Canadian Finance Minister Chrystia Freeland Freeland (also known as Fang Huilan) said that the latest federal budget containing such content was basically settled.
With regard to the ban on overseas buyers, she said at the time: “in order to ensure that homes are owned by Canadians and not foreign investors, the 2022 budget announces government restrictions that prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-entertainment, Canadian residential properties. It lasts for two years. ”
Looking back, the Liberal Party of Canadian Prime Minister Trudeau made such promises in the election campaign as early as last year.
In this way, when Cmur19 officially came into effect, many people had a feeling of “finally coming”.
It is conceivable that the Canadian government is determined to ensure the housing affordability of its citizens this time.
Of course, the measures related to Cmur19 are more than that, but this is undeniably the most concerned part, after all, it means that foreign buyers will not be able to buy residential property in Canada for two years from January 2023.
However, according to the implementation rules published by the federal government, foreign buyers will ban the purchase of “all non-entertainment homes” such as Canadian apartments, other condominiums and detached houses, but if the purchaser is “used as the main residence in Canada”, you can apply for exemption from the federal government.
Please note that “foreign buyers” will not include Canadian permanent residents (commonly known as “maple card” holders), legally recognized foreign workers, and foreign students, who will continue to purchase Canadian housing without restrictions.
In addition, the Canadian government also said that refugees and others fleeing the international crisis will be exempted from the ban.
To sum up, it is not that foreigners are not allowed to buy Canadian property, but “unidentified foreigners” who cannot buy apartments, cando, independent houses, etc., and there are no restrictions on buying holiday homes and other entertainment industries.