Canada Plans to Allow Foreign Buyers to Purchase New Homes: What It Means for Ontario Real Estate

Are you trying to figure out what Canada's November 5, 2026 federal budget means if you want to buy a new home in Ontario? Many headlines make it sound like foreign buyers can purchase any new condo tomorrow. In reality, Ottawa's plan is still a proposal, and Ontario adds heavy provincial and city taxes on top.

Getting the rules straight before you sign gives you real peace of mind. You can avoid costly surprises on title, deposits, and closing day. This article walks through what Budget 2026 proposes, what remains law today, and what a $1,000,000 new-home closing looks like in Toronto versus the suburbs.

Helpful pages on this site: Ontario closing-cost calculator, Toronto pre-construction market reset, and how two closings work.

Is Canada lifting its foreign-buyer ban in 2026?

No — Ottawa is not lifting the foreign-buyer ban in 2026, and the Budget 2026 changes are not law yet. On November 5, 2026, Prime Minister Mark Carney's government tabled Budget 2026 (Chapter 3) and Annex 3: Legislative measures. The plan proposes extending the federal ban on existing homes from January 1, 2027 to January 1, 2029. At the same time, it proposes a new carve-out for newly built homes.

As of November 12, 2026, Parliament has not passed an amending bill. Ottawa says it “will propose legislation and launch a regulatory process on this change in short order.” Until those rules take effect, the current federal prohibition stays in place.

Can foreigners purchase newly built homes in Canada?

Under Budget 2026, eligible foreign buyers could purchase new homes once the exemption becomes law — but today the old rules still apply. Ottawa says the goal is to draw investment into building new supply while keeping resale neighbourhoods available for Canadians.

One of the first things to check is whether you already qualify under the current federal Act and Regulations. Existing exemptions already cover several situations:

• Rural and small-town locations: Homes outside Census Metropolitan Areas and Census Agglomerations (major cities and surrounding suburbs) are excluded. Keep in mind that almost every GTA and Southern Ontario city sits inside one.
• Buildings with four or more units: The Act covers detached houses, buildings with up to three units, semi-detached homes, townhomes, and individual condo units. Larger multi-unit apartment buildings are outside the ban.
• Properties bought for development: Since March 2023, non-Canadians can buy residential property when the purpose is redevelopment or building new housing.
• Work-permit holders and certain students: Workers with at least 183 days left on a valid Canadian work permit at purchase may buy one home. International students face stricter rules, including five years of prior Canadian tax returns and a $500,000 price limit.
• Protected persons and mixed-status couples: Protected persons are exempt. So are non-Canadians buying jointly with a spouse or common-law partner (at least one year living together under federal rules) who is a Canadian citizen, permanent resident, person registered under the Indian Act, or qualifying worker.

Do not treat the federal rule lightly. Breaking the ban — or helping a prohibited buyer complete a restricted purchase — carries a fine up to $10,000. A court can also order a forced sale where the non-Canadian gets back no more than the original purchase price.

Can foreign buyers purchase pre-construction condos?

Today, signing a pre-construction condo contract falls under the federal ban unless an existing exemption applies. Under section 4(1) of the current federal rules, signing an Agreement of Purchase and Sale — even with conditions — counts as buying an interest in the home.

Budget 2026 uses the phrase “new residential properties,” which leaves three practical questions open for pre-construction buyers:

1. Pre-construction contracts vs. finished unsold suites: Will the exemption cover buying off plans before construction starts, brand-new completed condos that nobody has lived in, or both?
2. Effective date: Will the carve-out start as soon as legislation passes, or on January 1, 2027?
3. Pre-construction assignments: If a Canadian buyer assigns a pre-construction contract before final closing, will a foreign buyer qualify, or only direct builder sales?

Until Ottawa publishes the draft law and regulations, do not sign a pre-construction agreement assuming you are exempt. Have an Ontario real estate lawyer check your status and closing timeline first.

What properties would remain restricted until 2029?

Existing and resale homes would stay off-limits to most non-Canadians until January 1, 2029 under the Budget 2026 plan. Assuming the current property definitions carry forward, the extended ban would keep covering previously owned homes inside major urban areas:

• Resale detached and semi-detached houses
• Resale freehold and condominium townhouses
• Previously occupied or resale condo units
• Existing duplexes and triplexes (up to three dwelling units)

For Ontario buyers, that keeps existing homes across Toronto, the GTA, Hamilton, Kitchener-Waterloo, and Ottawa restricted through 2028. Any new federal opening is aimed strictly at newly built housing.

Does Ontario's 25% foreign-buyer tax still apply?

Yes — Ontario's 25% Non-Resident Speculation Tax (NRST) is provincial law and still applies across the province. Budget 2026 does not override provincial or city taxes. Under Ontario's NRST rules, the 25% tax applies anywhere in Ontario on residential property with one to six homes. That includes new builds and pre-construction condos.

There are several things to consider before you budget for a new home in Ontario:

• Extras and builder charges add to the tax base: Per Ontario Ministry of Finance rules for new homes, NRST is charged on the full value of the consideration — not just the base brochure price. Upgrades, lot premiums, assumed development charges, Tarion fees, meter installs, and assignment markups can all raise the bill at closing.
• Standalone parking and lockers are taxed too: Since March 27, 2024, buying a standalone condo parking spot or storage locker in Ontario can also trigger NRST.
• Co-buying does not split the tax: NRST is never prorated. If two Canadian citizens buy with one foreign national — even for a 10% share, outside an exempt spouse setup — the 25% tax applies to 100% of the purchase price. Every person on title shares responsibility for paying it.
• Ontario's spouse rule is stricter than Ottawa's: Federal rules recognize a common-law partner after one year. Under Ontario's NRST exemptions, unmarried couples need three continuous years living together (or a child together) and must move in within 60 days of closing.

If you do qualify for permanent residency later, Ontario's Permanent Resident NRST rebate can refund the 25% tax. You must hold title alone (or only with your spouse), move in within 60 days as your main home, become a permanent resident within four years, and apply within 180 daysof your official PR approval date. Note that Ontario's older transitional student and worker rebates ended on March 31, 2025.

Does Toronto charge an additional 10% tax?

Yes — Toronto charges an extra 10% Municipal Non-Resident Speculation Tax (MNRST), making the combined foreign-buyer tax 35% in the city. Toronto's MNRST started on January 1, 2025 with no grandfathering for older purchase agreements. It sits on top of Ontario's 25% NRST and both regular land transfer taxes.

That creates a major cost gap between Toronto and nearby suburbs. Take an illustrative $1,000,000 new condo closing (repeat buyer, no NRST/MNRST exemption, before builder levies or occupancy fees):

Could the policy encourage new construction and condo sales?

It could widen the buyer pool for new condos and townhomes, though Ontario's extra taxes still hold back demand. Many Ontario condo launches have slowed in 2026 because banks ask for high pre-sale numbers before lending construction money. At the same time, newly finished but unsold units have built up.

If final rules cover both pre-construction contracts and finished unsold suites, builders could market new projects abroad again. Budget 2026 also pairs this plan with wider housing finance updates: a $1.5 million insured mortgage cap with 30-year terms for new builds and first-time buyers, plus February 1, 2027 insurance options for 3-to-50 unit projects.

Still, a federal exemption alone does not guarantee higher Ontario sales or rising prices. Before the 2023 federal ban, Ontario data already showed foreign buyers made up only about 1.25% of GTA home transfers (and 2% in Toronto) once provincial taxes rose to 25%. Unless a buyer plans to become a permanent resident and claim the rebate, an extra 25% in Mississauga, Vaughan, or Kitchener — or 35% in Toronto — remains a steep hurdle. Domestic buyers should also compare Ontario's enhanced HST rebate when weighing new construction.

Non-resident corporate withholding tax proposal (effective 2027)

Separate from the homebuyer ban, Budget 2026 proposes lowering CRA closing holdbacks when foreign corporations sell taxable Canadian property on or after January 1, 2027. In Budget 2026 Tax Measures, Ottawa notes that current Section 116 withholding rates often hold back more money than a foreign corporation actually owes in Canadian corporate tax:

Keep two limits in mind. First, this cut applies only to non-resident corporations, not individual foreign owners or trusts. Second, withholding is a temporary holdback until the CRA issues a clearance certificate — not a lower capital-gains tax rate. Budget 2026 also proposes skipping withholding on tax-deferred Section 85 corporate transfers when CRA receives notice within 30 days.

What Ontario buyers can check before signing

Depending on your needs, focus on the rules that are already settled law while Ottawa drafts its bill:

• Wait for the exact legislative wording: Confirm how “new residential properties” is defined, the start date, and whether contract assignments qualify.
• Verify everyone going on title early: If any buyer is not a Canadian citizen or permanent resident, have your lawyer check federal eligibility, Ontario NRST, and Toronto MNRST before your cooling-off window ends.
• Compare full closing cash across cities: Use our project comparison tool and closing-cost calculator to weigh prices, move-in dates, and land transfer tax side by side.

Frequently asked questions