On November 5, 2026, the federal government’s 2026 Budget was introduced and contains the following measures that impact those investing in, owning, developing and providing services related to real estate in Canada:
1. Extension of the Ban on Foreign Purchases of Residential Property - Extended to January 1, 2029
The prohibition on the purchase of residential property by non-Canadians under the Prohibition on the Purchase of Residential Property by Non-Canadians Act is proposed to be extended for two years, to January 1, 2029. However, government commentary suggests the ban will apply only to existing residential properties, with new residential properties exempted. Further details on this are expected in the coming months.
2. Reduced Withholding on Dispositions of Taxable Canadian Property by Non-Resident Corporations - Effective January 1, 2027
Where a non-resident disposes of taxable Canadian property (“TCP”), such as Canadian real estate, a purchaser must typically withhold and remit a portion of the purchase price to the Canada Revenue Agency (“CRA”) unless the vendor obtains a clearance certificate. Budget 2026 proposes that, dispositions on or after January 1, 2027 by non-resident corporate vendors, would see withholding and remittance rates reduced as follows:
- From 25% to 15% for capital property other than specified TCP; and
- From 50% to 30% of the purchase price for specified TCP.
In addition, Budget 2026 proposes to exempt vendors and purchasers from the withholding and tax remittance requirements for fully tax-deferred rollovers of TCP (pursuant to Section 85 of the Income Tax Act) if, within 30 days of a disposition, an election form is filed and the purchaser provides applicable notice to the CRA, which includes, among other things, information on the transaction and vendor.
3. Expanded EIFEL Exception for Purpose-Built Rental Housing - Effective for Taxation Years Beginning on or after October 1, 2023
The Excessive Interest and Financing Expenses Limitation (“EIFEL”) rules restrict the amount of net interest and financing expenses that certain taxpayers may deduct. Budget 2024 announced an exception for interest and financing expenses incurred before 2036 on borrowings used to acquire or build purpose-built rental housing in Canada, or to convert a property into such housing. Budget 2026 proposes to expand the exception to cover borrowings where the purpose-built rental activities are carried on by another corporation, trust or partnership within the borrower’s group of affiliated entities, or by a partnership in which the borrower (together with affiliated entities) holds at least a 40% interest.
4. Build Canada Homes Capital and Federal Lands Funding - Commencing in the 2027-28 Fiscal Year
Budget 2026 proposes an additional $13 billion (funded over 10 years), to boost the capital of Build Canada Homes for non-market housing. This would bring its total capitalization to $45 billion, with a target of 200,000 new homes over the next decade.
A further $1.5 billion over four years, starting in 2027-28, and $387.4 million in future years is proposed to prepare federal lands for housing by funding water, wastewater, roads and other enabling infrastructure. Budget 2026 also proposes $100 million to support municipal e-permitting and the adoption of artificial intelligence in approval processes in an attempt to get homes built faster.
5. 2027-2029 Immigration Levels Plan - Applicable to 2027 through 2029
Budget 2026 proposes to implement the 2027-2029 Immigration Levels Plan, which sets the following targets for each of 2027, 2028 and 2029:
- 380,000 permanent resident admissions; and
- 370,000 new temporary resident arrivals.
Budget 2026 also proposes to give up to 200,000 temporary residents already in Canada the opportunity to become permanent residents by the end of 2027. These changes may affect rental housing demand and the availability of skilled construction labour in British Columbia.