Yes, foreigners and non-residents can buy commercial property in Canada. The Prohibition on the Purchase of Residential Property by Non-Canadians Act (the "Foreign Buyer Ban"), extended to January 1, 2027, applies only to residential buildings with three or fewer dwelling units. Commercial real estate, including offices, retail, industrial, and warehouses, is not restricted.
Despite that clear answer, many foreign investors hesitate because Canada's headline foreign buyer rules are easy to misread. A federal ban on foreign housing purchases has been in the news since 2023, and brokers and investors sometimes assume it sweeps in all real estate. It does not. The ban is narrow, and commercial property sits well outside it.
That said, "you can buy it" is not the same as "there are no rules." Foreign purchasers of Canadian commercial real estate still need to consider the Investment Canada Act, HST/GST, non-resident withholding tax, land transfer tax, and how to structure the acquisition. At Hadri Law, a multilingual corporate and commercial firm in Toronto, we regularly guide international investors through exactly these issues. This article explains the law, the practical structuring choices, and the tax obligations that come with owning commercial property in Canada as a non-Canadian.
What the Foreign Buyer Ban Says About Commercial Property
The statute behind the headlines is the Prohibition on the Purchase of Residential Property by Non-Canadians Act, SC 2022, c 10 s 235, which came into force on January 1, 2023. It was originally a two-year measure. The federal government later extended it to January 1, 2027 through the Budget Implementation Act, 2024, No. 1, with the policy announcement made on February 4, 2024.
The first thing to understand is who the ban targets. A "non-Canadian" includes a foreign national who is not a permanent resident, a corporation incorporated outside Canada, and a Canadian-incorporated entity that is controlled by non-Canadians. So the rule reaches far beyond individuals buying a home.
The decisive point, however, is what kind of property the ban covers. Under the accompanying regulations, "residential property" means a building containing not more than three dwelling units, such as detached houses, semi-detached houses, duplexes, and triplexes, located in a census metropolitan area or census agglomeration. The prohibition simply does not extend further than that definition.
That leaves a large category of real estate untouched. Commercial buildings such as offices, retail plazas, industrial facilities, and warehouses are outside the ban entirely. So is bare land intended for commercial development, and so are most multi-residential investment properties with four or more dwelling units, because a building with four or more units falls outside the residential definition. In other words, a foreign investor can buy an apartment building of four units or more even during the ban period. For a fuller treatment of how these categories diverge, see our guide on the difference between commercial and residential property in Ontario.
One caution worth flagging early. The Act contains anti-avoidance provisions aimed at arrangements designed to let a non-Canadian indirectly acquire residential property through a structure that looks compliant on paper. This is not a concern for a genuine commercial acquisition. It becomes relevant only when a deal touches a residential component, which is the grey zone we address later in this article.
When the Investment Canada Act Applies to a Foreign Commercial Property Purchase
The Foreign Buyer Ban is not the only federal statute foreign investors should know about. The Investment Canada Act, RSC 1985, c 28 (1st Supp), governs how non-Canadians acquire control of Canadian businesses. The key word there is "businesses," not "property."
The Act requires a non-Canadian who acquires control of a Canadian business either to file a notification with Innovation, Science and Economic Development Canada (ISED) or, when the transaction crosses the applicable threshold, to obtain ministerial approval through a net benefit review. There is also a separate national security review that can apply to any investment regardless of its size.
This distinction matters because a passive purchase of real estate is usually not the acquisition of a business. Consider three scenarios. A foreign investor who buys an office tower from a Canadian company in a straightforward asset purchase, with no operating business transferring alongside it, is generally just completing a real estate transaction and would not need to file under the Act. By contrast, a foreign investor who acquires a property management company, or a real estate investment trust with operating assets, is acquiring control of a Canadian business and the Act is engaged. A third case sits in between: buying a shopping centre as part of an M&A deal in which the Canadian vendor also runs the retail operation may carry Investment Canada Act implications, depending on whether an operating business actually transfers.
For investors who do trigger the Act, the net benefit review thresholds are high. The figures published in the Canada Gazette in January 2026 and posted by ISED are $2.179 billion in enterprise value for trade-agreement investors (such as those under CETA or the CPTPP), $1.452 billion in enterprise value for WTO investors that are not state-owned enterprises, and $578 million in asset value for state-owned enterprises. Most individual commercial property deals fall far below these numbers, so a net benefit review is unlikely for a typical transaction. These thresholds are adjusted annually, so the current year's figures should always be confirmed for a live deal.
National security review is different. It can apply at any deal size, and ISED's guidelines identify sectors of heightened scrutiny, including critical infrastructure such as ports, utilities, and telecommunications, as well as sensitive technology. Buying a standard commercial building would not normally raise a national security concern, but a purchase near sensitive government sites or involving critical infrastructure could draw attention.
Finally, even when a deal sits below the review threshold, a non-Canadian acquiring control of a Canadian business must file a notification within 30 days of closing. The line between a reviewable transaction and a simple notification is fact-specific, and getting it wrong is costly. If your acquisition involves an operating business and not just a building, it is worth reading our deeper explainer on when an investment triggers review under the Investment Canada Act, or speaking with an Investment Canada Act lawyer before you sign.
How Foreign Investors Typically Structure a Canadian Commercial Property Purchase
Once the legal path is clear, the next question is how to hold the property. There is no single right answer, but a few structures recur in practice.
The most common approach is a Canadian subsidiary corporation. A non-Canadian investor incorporates a Canadian corporation, either federally under the Canada Business Corporations Act or provincially under Ontario's Business Corporations Act, and that corporation becomes the registered owner of the property. This structure limits personal liability, makes it easier to obtain mortgage financing from Canadian lenders, simplifies a future exit because the investor can sell shares rather than the underlying asset, and can help with access to treaty-reduced withholding rates when structured properly. One point to plan for is that a CBCA corporation has a 25 percent resident Canadian director requirement, so board composition needs professional advice.
A second option is a non-resident corporation holding the property directly. A foreign corporation, such as a US LLC or a European holding company, buys the Canadian commercial property in its own name. This is permissible for commercial property because there is no ownership restriction. The trade-offs are mainly tax and financing related: the tax treatment of distributions can be less favourable without careful planning, and Canadian institutional lenders are often more reluctant to lend to a foreign entity.
A third structure, less common for straightforward acquisitions, is a partnership or joint venture with a Canadian entity. This arises most often in development projects. It must be structured carefully, because any residential component can bring the anti-avoidance provisions of the Foreign Buyer Ban into play.
Whatever the structure, three practical considerations apply across the board. First, FINTRAC compliance: lawyers and real estate professionals must verify identity and source of funds under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Second, financing: Canadian institutional lenders typically want a Canadian registered entity as the borrower and may require personal guarantees from the foreign principals. Third, land transfer tax: Ontario levies land transfer tax on any conveyance of Ontario real property, it applies equally to foreign and domestic buyers of commercial property, and there is no foreign-buyer surcharge on commercial property. Buyers in the City of Toronto also pay an additional Municipal Land Transfer Tax on top of the provincial tax. For investors coordinating a cross-border purchase, our Toronto international business lawyers can align the corporate, financing, and compliance pieces from day one.
Tax Obligations for Non-Residents Who Buy Commercial Property in Canada
Tax is where foreign buyers most often need guidance, because several different regimes apply at once. The points below are general information, not personalized tax advice. The right structure depends on your country of residence and the specifics of your deal, so confirm the details with a tax lawyer or a Chartered Professional Accountant.
HST on the purchase. Commercial real property transactions are generally taxable supplies subject to HST, which in Ontario is 13 percent, made up of the 5 percent federal GST and an 8 percent provincial portion. Normally the seller, if a registrant, charges and collects the HST. There is an important wrinkle for foreign buyers. When the seller is a non-resident who does not collect HST, section 221(2) of the Excise Tax Act relieves the non-resident seller of the obligation to collect, and the buyer must self-assess and remit the HST directly to the Canada Revenue Agency under section 228(4) of the same Act, as explained in CRA Guide 19-4-1. To do this, the buyer needs a GST/HST registration number. The good news is that HST paid on a commercial purchase is generally recoverable as an input tax credit if the property is used in commercial activities, so for most investors it is a cash-flow item rather than a permanent cost. Mixed-use property with residential units follows different rules and needs separate analysis.
Withholding tax on rental income. A non-resident who earns rental income from Canadian property is subject to 25 percent non-resident withholding tax on the gross rent under Part XIII of the Income Tax Act, with the Canadian tenant or property manager required to withhold and remit it. Many investors reduce this burden by electing under section 216 of the Income Tax Act to file a Canadian return and pay tax on net rental income, after deductible expenses, rather than 25 percent on gross rent. A tax treaty between Canada and the investor's country of residence may reduce the rate further.
Withholding on a future sale. When a non-resident sells taxable Canadian property, which includes commercial real estate, section 116 of the Income Tax Act requires the seller to notify the Canada Revenue Agency and obtain a clearance certificate before or promptly after closing. Without a certificate, the buyer must withhold and remit to the CRA 25 percent of the amount by which the purchase price exceeds the applicable certificate limit, which is generally tied to the adjusted cost base of the property. The practical lesson is timing. Foreign sellers should apply for the clearance certificate well ahead of closing, because CRA processing can take weeks or even months.
Land transfer tax and the NRST. Ontario land transfer tax applies at graduated rates on the purchase price, with no foreign-buyer surcharge on commercial property, and Toronto adds its Municipal Land Transfer Tax. Crucially, Ontario's Non-Resident Speculation Tax, currently 25 percent, applies only to residential property containing one to six single-family residences. It does not apply to commercial property. So while a foreign buyer of commercial real estate avoids the NRST entirely, that buyer still pays the same land transfer tax as everyone else, and the Toronto municipal tax where applicable.
Mixed-Use Properties: The Grey Zone
The cleanest cases are pure commercial or pure residential. The complications arise with mixed-use buildings, such as ground-floor retail with apartments above.
The test under the Foreign Buyer Ban turns on dwelling units. The prohibition applies to a building containing three or fewer dwelling units. A building with four or more residential units alongside commercial space is generally not caught. So a small shop with two residential apartments above it is residential property under the Act, and a non-Canadian cannot buy it during the ban period. A larger mixed property with four or more residential suites above the stores is generally outside the ban.
The trap is assuming that any commercial presence makes the whole building "commercial" for ban purposes. It does not. Provincial land use and zoning classifications under Ontario's Planning Act do not govern the federal definition either. The only thing that matters for the ban is the dwelling-unit count in the Act's own definitions. Because the line is genuinely fact-specific, any acquisition with a residential component should be reviewed by a lawyer before you commit.
Frequently Asked Questions
Does the foreign buyer ban apply to commercial real estate in Canada?
No. The Prohibition on the Purchase of Residential Property by Non-Canadians Act applies only to residential property, defined as a building with three or fewer dwelling units. Offices, retail, industrial, warehouse, and other commercial real estate fall outside the ban and can be purchased by non-Canadians without restriction.
Can foreigners buy commercial property in Canada if they are from the US?
Yes. A US company or individual can buy Canadian commercial property without restriction under the Foreign Buyer Ban. The main considerations are how to structure ownership, whether the Investment Canada Act applies if an operating business is being acquired, and the HST, withholding, and land transfer tax obligations that follow.
Do foreigners pay extra tax when buying commercial property in Canada?
There is no foreign-buyer surcharge on commercial property. Foreign buyers pay the same land transfer tax as Canadians, plus the Toronto Municipal Land Transfer Tax in Toronto. The differences are procedural, such as self-assessing HST when the seller is a non-resident, and non-resident withholding tax on rental income and on a future sale.
Is there a Non-Resident Speculation Tax on commercial property in Ontario?
No. Ontario's Non-Resident Speculation Tax, currently 25 percent, applies only to residential property containing one to six single-family residences. It does not apply to commercial property purchases by foreign buyers in Ontario.
Does the Investment Canada Act apply if I just buy a building?
Usually not. A passive purchase of real estate is generally not the acquisition of a Canadian business, so the Investment Canada Act is not engaged. The Act applies when you acquire control of an operating business, such as a property management company or a business sold together with its real estate. In those cases a notification, and sometimes a review, may be required.
Can a non-resident get a Canadian mortgage for commercial property?
Often yes, but lenders typically prefer to lend to a Canadian registered entity rather than a foreign corporation, and they may require personal guarantees from the foreign principals. This is one reason many foreign investors hold Canadian commercial property through a Canadian subsidiary corporation.
Sources & Official Resources
Federal Statutes Cited
- Prohibition on the Purchase of Residential Property by Non-Canadians Act, SC 2022, c 10, s 235
- Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250
- Budget Implementation Act, 2024, No. 1, SC 2024, c 17
- Investment Canada Act, RSC 1985, c 28 (1st Supp)
- Excise Tax Act, RSC 1985, c E-15 -- section 221
- Income Tax Act, RSC 1985, c 1 (5th Supp) -- section 116
- Canada Business Corporations Act, RSC 1985, c C-44 -- section 105 (director residency)
Government Guidance 8. Investment Canada Act -- Review Thresholds (ISED, 2026) 9. Government Announces Two-Year Extension to Ban on Foreign Ownership of Canadian Housing (Finance Canada, February 4, 2024) 10. CRA Guide 19-4-1 -- Commercial Real Property: Sales and Rentals 11. CRA -- Non-Residents: Rental Income and Non-Resident Tax (Part XIII) 12. CRA -- Income Tax Guide for Electing Under Section 216 13. CRA -- Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents -- IC72-17R6
Provincial Resources 14. Ontario Non-Resident Speculation Tax (ontario.ca)
Talk to a Lawyer at Hadri Law
If you are a foreign investor looking to acquire commercial property in Canada, having the right legal team in place from day one makes a real difference. The path is open, but the Investment Canada Act, HST self-assessment, non-resident withholding tax, and the structuring choices behind the purchase all reward careful planning.
Hadri Law has helped international clients structure cross-border acquisitions, handle Investment Canada Act obligations, and coordinate the corporate and tax pieces of Canadian commercial real estate deals. As a multilingual boutique firm in Toronto, we advise clients in English, French, Spanish, and Catalan, bridging the North American, European, and African markets.
Call +1 (437) 974-2374 for a free consultation, or book online at calendly.com/hadrilaw/free-consultation.
This article provides general information and is not legal or tax advice. Every situation is different. Contact a lawyer to discuss your specific circumstances.
