Everything you need to know about buying property in Canada
The Canadian real estate market is one of the most dynamic in the world, with prices varying considerably between provinces. Understanding acquisition fees – Land Transfer Tax, GST/HST, legal fees – is essential to prepare your budget. The stress test imposed by OSFI (Office of the Superintendent of Financial Institutions) makes mortgage qualification more demanding.
Land Transfer Tax: the provincial property transfer tax
The Land Transfer Tax (LTT) is the Canadian equivalent of transfer duties. Its rate varies by province. In Ontario, it is progressive: 0.5% on the first C$55,000, 1% from C$55,000 to C$250,000, 1.5% from C$250,000 to C$400,000, 2% from C$400,000 to C$2,000,000, and 2.5% above that for property with one or two single-family residences. In Toronto, an additional municipal LTT applies. In Alberta and Saskatchewan, there is no provincial LTT. First-time buyers in Ontario receive a rebate of up to C$4,000.
GST/HST on new construction
The GST (Goods and Services Tax) at 5% applies to new construction and major renovations in Canada. In provinces with HST (Harmonized Sales Tax) – Ontario (13%), New Brunswick (15%), Nova Scotia (14% since April 1, 2025) – the combined rate is higher. A partial rebate (GST New Housing Rebate) of 36% of the GST, capped at C$6,300, is available for homes under C$450,000, potentially reducing the effective GST to about 3.2%. Since Bill C-4 received Royal Assent (March 2026), first-time buyers of a new home also get a rebate of the full GST up to C$1,000,000 (reduced between C$1,000,000 and C$1,500,000, maximum C$50,000), for agreements signed on or after March 20, 2025 and before 2031. The simulator applies the 5% GST without these rebates. Resale properties are exempt from GST/HST.
The Canadian mortgage stress test
Since 2018, the OSFI stress test requires all borrowers to qualify at the higher of their contract rate + 2% or the floor rate of 5.25%. This means even if your bank offers a rate of 5.5%, you must prove you can pay at 7.5%. This rule significantly reduces the maximum borrowing amount and aims to protect households against potential rate increases.
FHSA and first-time buyer programs
The FHSA (First Home Savings Account) allows first-time buyers to save up to C$8,000 per year (C$40,000 lifetime) with a tax deduction on contributions and tax-free withdrawals for purchase. The HBP (Home Buyers' Plan) allows withdrawing up to C$60,000 from your RRSP tax-free. The Home Buyers' Tax Credit offers up to C$1,400 in non-refundable credit in 2026 (C$10,000 at the 14% rate). These programs can be combined to maximize your down payment.
Foreign buyer ban
Since January 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act prohibits non-residents and non-citizens from purchasing residential properties in Canada. This ban, initially planned for 2 years, has been extended. Exceptions exist for permanent residents, refugees, diplomats and specific cases. Recreational properties and vacant land may be exempt. Check current rules before planning a purchase.
CMHC mortgage insurance
In Canada, if your down payment is less than 20% of the purchase price, you must obtain mortgage insurance from CMHC (Canada Mortgage and Housing Corporation), Sagen or Canada Guaranty. The premium ranges from 2.8% to 4% of the loan amount depending on the loan-to-value ratio. For properties of C$1,500,000 or more, the minimum down payment is 20% (cap raised from C$1,000,000 to C$1,500,000 on December 15, 2024). The insurance cost is typically added to the loan amount.
Real estate markets by province
Real estate prices vary enormously across Canada. Toronto and Vancouver have the highest prices, with averages exceeding C$1,000,000 for a house. Montreal remains more affordable with average prices around C$550,000. The Prairies (Alberta, Saskatchewan, Manitoba) offer the best value. The Halifax and Atlantic provinces markets have seen strong growth since the pandemic. The national benchmark price (MLS HPI index) is approximately C$730,000.
Types of Canadian mortgages
Canadian mortgages are characterized by their term (typically 5 years) and their amortization (up to 25 years, or 30 years with a 20% down payment; 30 years is also available on insured mortgages for first-time buyers and buyers of new builds since December 15, 2024). Rates can be fixed or variable (tied to the prime rate). Open mortgages allow prepayment without penalty, while closed mortgages offer better rates. Prepayment penalties can amount to the interest rate differential (IRD) over 3 months.
Provincial differences: Quebec vs Ontario vs British Columbia
Each province has its own closing cost structure. In Quebec, the welcome tax (droits de mutation) is progressive: in 2026, 0.5% on the first C$62,900, 1% up to C$315,000 and 1.5% above that, with higher municipal rates allowed above C$500,000 (Montreal goes from 2% above C$552,300 up to 4% above C$3,113,000). Since January 1, 2026, a refundable tax credit reimburses first-time buyers up to C$5,875 of welcome tax (reduced above C$750,000, nil from C$1,000,000). In Ontario, the Land Transfer Tax is progressive up to 2.5% on amounts over C$2,000,000, but first-time buyers receive up to C$4,000 back. Toronto doubles the cost with its own municipal LTT. In British Columbia, the Property Transfer Tax ranges from 1% to 3%, plus a 2% surcharge above C$3,000,000. BC also imposes a 20% foreign buyer tax in designated areas and a Speculation and Vacancy Tax on empty homes.
Non-resident speculation tax across provinces
Several Canadian provinces levy a speculation or non-resident buyer tax to cool overheated housing markets. British Columbia charges a 20% Additional Property Transfer Tax on purchases by foreign nationals in Metro Vancouver and other designated regions. Ontario applies a 25% Non-Resident Speculation Tax (NRST) on residential purchases by non-citizens and non-permanent residents anywhere in the province. These taxes are in addition to standard land transfer taxes and cannot be recovered even if the buyer later obtains permanent residency. Some limited exemptions apply for nominees under provincial immigration programs and for purchases of commercial or agricultural land. The federal foreign buyer ban adds another layer, making it critical for non-residents to seek legal advice before any purchase attempt.
First-Time Home Buyer Incentive and shared equity programs
The First-Time Home Buyer Incentive (FTHBI) was a shared equity program where the federal government contributed 5% or 10% of the purchase price toward the down payment. It closed to new applications on March 21, 2024 and no new approvals have been granted since March 31, 2024. Existing participants still repay the incentive after 25 years or upon sale, based on the fair market value at that time, so the government shares in any appreciation or depreciation of the property. Some provinces and municipalities run their own down payment assistance or shared equity programs that can be layered with federal benefits. Consider whether the long-term cost of sharing equity outweighs the short-term relief on monthly cash flow.