The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which came into effect on January 1, 2023, was introduced to address housing affordability concerns by restricting foreign investment in the Canadian housing market. It may seem a bit overly harsh on the surface, but the market at the time was overheating for years and the Canadian government felt that some action had to be taken. Where some people get confused is for who exactly the act applies to. There are many options still available to permanent residents, as the Act does not apply directly to permanent residents. PRs are still legally entitled to purchase residential property in all of Canada, including new condominiums, without facing the same restrictions as non-residents.

However, there are still some long-standing restrictions that do affect PRs, as they are still subject to the standard real estate practices and regulations that affect all Canadians. These include:

1. Provincial and Municipal Laws: Property transactions are both subject to the laws of the province or territory where the property is located, as well as municipal bylaws. In British Columbia, it is the Real Estate Services Act that governs real estate transactions. 
2. Contract Law: The purchase and sale of a condo is a legally binding contract. PRs must understand the terms and conditions of the contract, including financing clauses, inspection clauses, and closing dates. It can be complicated, so retaining professionals is highly advised during the process.

Once you're into buying a condo seriously, you’ll find that there is a complex web of tax implications and incentives for permanent residents. It can be hard to separate the wheat from the chaff, so here’s a rundown of what’s most important:

• Property Tax: Owning a condominium means owning property in Canada, which is subject to property taxes. Permanent residents are responsible for paying their property taxes to the municipality the condo is located. It is calculated based on the assessed value of the property.

• Property Transfer Tax (PTT): In British Columbia, another tax takes effect, the PTT. It is a one-time tax event paid during the purchase of a property. An example of how this is calculated is shown here: 

• 1. 1% on the first $200,000 of the purchase price.
  2. 2% on the portion between $200,000 and $2,000,000.
  3. 3% on the portion greater than $2,000,000.
  4. Additional 2% on the portion of the fair market value exceeding $3,000,000 for residential properties.

Exemptions and reductions may apply (see sections on first-time homebuyers).

• First-Time Home Buyers’ Program: BC also has a first time home buyers’ program, to help first time buyers purchase their first home. Its major benefit is that it eliminates or at least reduces the amount of PTT one has to pay. To qualify, the property must be intended as the buyer’s principal residence and below a certain threshold in price, which changes annually.

• GST/HST New Housing Rebate: Some newly built condos are eligible for a rebate on the Goods and Services Tax (GST) or Harmonized Sales Tax (HST). This can be a substantial discount, so it’s always worth investigating.

• Capital Gains Tax: In addition to regular taxes, there is also a tax on any profit a seller takes on a sold property. That is, if you bought a condo for $750k and sold it for $900k, you’ll be taxed on the $150k you’ve earned in profit at the capital gains tax rate. In Canada, this is taxed like income on the year you sold, but cut in half. In the above case, it would be like adding $150k to your yearly income and taxed progressively as normal. Let’s imagine it comes out to $70k in taxes. As capital gains tax, you only pay 50% of this, so $35k total. One final caveat: if the condo is your primary residence, a portion or all of the capital gain may be exempt from tax under the principal residence exemption clause.

As a permanent resident, securing good rates on loans used for home-buying can be more difficult than it is for citizens, but there are still many options available. For permanent residents in British Columbia, here are the steps we recommend to assess your financing options:

1. Build a Credit History: A good credit score is essential for obtaining a mortgage at good interest rates in Canada. You can establish a credit history in Canada by obtaining a credit card, paying bills on time, and demonstrating responsible financial behaviour. Generally, a good strategy for this is using 15-30% of your total credit limit regularly and paying it off monthly, so you don’t have to pay any interest charges.
2. Gather Financial Documents: Lenders generally require the following financial documents to assess a PR's financial situation

In this section, we’ll look at some of the specific challenges a first-time buyer in Canada faces alongside the benefits Canada provides to first-time buyers. On balance, the Canadian government works hard to provide first-time buyers with the tools needed to get their foot in the door in even highly competitive markets.

Key Challenges for First-Time Buyers

If you’re a permanent resident and first-time condo buyer in Canada, there are a few common challenges that are common trends among most potential buyers.

• Understanding the Market: The Canadian condo market is very different on a province and city basis. Urban areas like Vancouver or Toronto have highly competitive pricing and limited inventory. While there’s been some evening out of prices in recent years, smaller cities are still much more affordable. So, you have to be looking locally to get a real idea of the prices you can expect.
• Budgeting and Saving for a Down Payment: First-time buyers should evaluate their financial situation realistically. Down payments can be very large for condos in big cities, so make sure it’s something you can get together along with potential closing costs.
• Navigating Legal and Tax Requirements: Even after the down payment, there are quite a few tax and legal requirements that are tricky to fully grasp. These can greatly affect how much you can afford in the long term, so it’s important to get experts to check over the expected calculations.

Government Support Programs

Canada offers a few different options to assist first-time buyers. Here are three of the most important programs and incentives you should be aware of:

• First-Time Home Buyer Incentive (FTHBI): This federal program provides financial assistance to eligible first-time buyers by offering an equity-sharing loan (one that shares the financial value of the home between the buyer and the government), The advantage of this is that it substantially reduces monthly mortgage payments without accruing interest.
• Home Buyers' Plan (HBP): This allows first-time buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to purchase their first home. However, there is the added wrinkle that the amount must be repaid over 15 years to avoid penalties.
• BC First-Time Home Buyers' Program: In British Columbia, qualifying first-time buyers can obtain full or partial exemptions from the Property Transfer Tax, leading to substantial savings.

British Columbia is home to beautiful shorelines, stunning tree lines, and majestic mountains. It’s a popular destination for newcomers due to its location on the Pacific Ocean and its balanced combination of metropolitan and rural areas.

The province’s real estate market is particularly influenced by foreign buyers and newcomers, especially in Vancouver, where competition for condo purchases is very high. However, while there is no foreign buyer’s tax in BC generally, the province introduced a foreign buyers’ tax in 2016, applying a 20% tax to property purchases in certain regions, including Metro Vancouver, Fraser Valley, and Victoria. These measures aim to curb speculative investments and ensure greater housing affordability for residents.

In addition, the federal foreign buyers’ ban, implemented in January 2023, prohibits non-residents from purchasing residential property across Canada (including BC) for two years. However, exceptions exist for international students, temporary workers, and certain other groups.

Additionally, For permanent residents and citizens, BC offers strong financial incentives to invest in real estate. Permanent residents are exempt from the foreign buyers’ tax, creating a favourable environment for long-term immigration-driven demand.

Rising Housing Costs and Challenges

Even with these changes to the market, BC remains one of the most expensive housing markets in Canada. As of late 2024, the benchmark price for a single-family home in Greater Vancouver exceeds CAD 1.4 million (~2 million for a detached, 1.1 for a townhouse), while condos average around CAD 750,000.

This trend reflects a combination of limited housing supply, high demand from newcomers, and the desirability of BC's lifestyle. The province’s geography—with livable areas tending to be surrounded by mountains, ocean, and protected lands—also constrains urban expansion, which has made it harder for the supply to meet rising demand.

Just like full Canadian Citizens, permanent residents in Canada have the right to purchase new condominiums. British Columbia in particular offers a welcoming environment for PRs looking to enter the real estate market, but market demand has been steadily increasing for so long that prices are high. By understanding the rules and limitations, potential tax implications and incentives, and the steps involved in securing financing, we hope we’ve made it so that permanent residents can more confidently navigate the process of buying a new condo in BC and achieve their homeownership goals.

If you are still seeking additional information and guidance, it’s advised you speak to a professional real estate agent or mortgage broker.