Canada’s 2026 federal budget proposes significant changes to restrictions on foreign residential property purchases. The government plans to extend the federal foreign buyer ban until January 1, 2029, while introducing an exemption for newly constructed residential properties.
The proposal would maintain restrictions on existing homes while potentially creating new opportunities for foreign nationals interested in purchasing newly built properties in Canada.
Foreign Buyer Ban Proposed to Continue Until 2029
The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into effect on January 1, 2023. Originally introduced for two years, the prohibition was subsequently extended until January 1, 2027.
Budget 2026 proposes another two-year extension, bringing the expiry date to January 1, 2029. The legislation generally restricts non-Canadians from purchasing certain residential properties in Canada, subject to geographical limitations and applicable exemptions. The government states that extending the prohibition would help protect housing affordability by keeping the vast majority of existing residential properties available to Canadians.
New Exemption for Newly Constructed Homes
The most significant proposed change is the removal of new residential properties from the federal foreign buyer prohibition.
Budget 2026 outlines two distinct approaches:
- Existing and resale properties: The federal prohibition would continue until January 1, 2029, subject to existing exemptions.
- New residential properties: The government proposes lifting the federal prohibition for this category.
The government intends to encourage additional investment in new housing supply while maintaining restrictions on foreign purchases of existing homes. This could also provide greater housing opportunities for international professionals and other non-Canadians considering long-term settlement in Canada.
However, the exemption is not yet in effect. Its final scope, eligibility requirements and implementation date will depend on forthcoming legislation and regulations.
Existing Exemptions and Eligibility Requirements
The current federal prohibition already includes exemptions for certain purchasers and transactions. Depending on their circumstances, some temporary residents, protected persons and individuals purchasing property with an eligible spouse or common-law partner may qualify for exemptions. The legislation also contains geographical limitations and other exceptions.
Eligibility depends on several factors, including immigration status, property location and the specific requirements established under federal law. The proposed exemption for newly constructed homes would introduce an additional distinction within this framework.
Provincial Foreign Buyer Taxes Remain Separate
The federal foreign buyer prohibition should not be confused with provincial foreign buyer taxes. Certain provinces impose additional taxes or restrictions on property purchases by foreign nationals.
Budget 2026 does not announce the elimination of these provincial measures. Consequently, a purchaser who qualifies for an exemption from the federal prohibition may still face provincial taxes or other legal requirements.
When Will the Changes Take Effect?
Budget 2026 states that the federal government intends to propose legislation and launch a regulatory process to implement these changes.
Until the new measures take legal effect, the existing federal prohibition and its exemptions continue to apply. Prospective purchasers should therefore avoid assuming that newly constructed residential properties are already exempt.
Conclusion
Budget 2026 proposes a more targeted approach to foreign residential property purchases by maintaining restrictions on existing homes while allowing greater investment in new construction.
The proposed exemption is a welcome development that could help Canada attract and retain international talent while supporting housing development. However, its practical impact will depend on the final legislative and regulatory framework.
Contact Jain Immigration Law
For questions about your immigration status or how Canadian immigration laws may affect your plans, contact Jain Immigration Law to arrange a consultation.
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