Budget 2026: Foreign Buyer Ban to 2029, New Homes Exempt, and the Tax Breaks for Building New on the North Shore

What the budget proposes

Chapter 3 of the Budget 2026 document says: "Budget 2026 proposes to extend the ban on foreign purchases of existing residential properties for two years, to January 1, 2029, while exempting new residential properties." The same paragraph says the federal government "will propose legislation and launch a regulatory process on this change in short order." The budget's list of planned laws confirms a bill to extend the Prohibition on the Purchase of Residential Property by Non-Canadians Act to January 1, 2029.

There is no bill yet, no start date for the exemption, and no definition of a "new residential property". A new home could end up meaning a presale, a home nobody has lived in, or a home completed after a set date. For an owner who renovates, the open question is whether a home that has been substantially renovated will count as new under this rule. The budget does not say.

What the ban covers today

The ban took effect on January 1, 2023. On February 4, 2024 the Department of Finance extended it from January 1, 2025 to January 1, 2027, and that is still the end date in law until a new bill passes.

Section 2 of the Act covers a detached house or similar building with not more than three dwelling units, and a semi-detached house, rowhouse unit or condominium unit. A non-Canadian is a person who is not a Canadian citizen, not a permanent resident and not registered under the Indian Act. The fine for breaking the ban is up to $10,000.

The regulations allow some purchases anyway. A non-Canadian can buy residential property for the purposes of development, and a work permit holder can buy one home if the permit has 183 days or more of validity left on the day of purchase.

If you plan to sell your North Shore home

A house that has been lived in is an existing home. Under the proposal it stays inside the ban until January 1, 2029, so the people who can buy it to live in are the same as today: Canadian citizens, permanent residents and the groups the regulations allow.

BC's additional property transfer tax also stays. A foreign national, foreign corporation or taxable trustee pays 20% of the fair market value of their share of a residential property in the Metro Vancouver Regional District, which includes North Vancouver and West Vancouver. The budget says the federal government will continue to support measures "levied by other levels of government" against speculation, and nothing in it changes this tax.

So if you are renovating to sell, plan your price around the same buyers you would have had last year. A renovation that makes a home "new" for the federal exemption is a question for the regulations, and nobody can answer it yet.

The GST rebate for new and substantially renovated homes

The federal first-time home buyers' GST rebate returns all of the GST on a new home up to $1 million, to a maximum of $50,000, and shrinks to zero at $1.5 million. Bill C-4, which carries it, received royal assent on March 12, 2026. The Canada Revenue Agency says it covers a newly constructed or substantially renovated home.

The buyer test is strict. The person must be 18 or older, a Canadian citizen or permanent resident, and must not have lived in a home they or their spouse owned as their primary residence in the year of the purchase or the four years before. Most North Shore owners who already live in their own house will not pass it. An adult child buying or building a first home may.

The rebate also covers a home you build, or hire someone to build, on land you own. The CRA says construction or substantial renovation must begin on or after March 20, 2025 and before 2031, the home must be substantially completed before 2036, and the first-time buyer must be the first person to live in it. For a purchase from a builder, the agreement must be signed on or after March 20, 2025 and before 2031.

A substantial renovation has a precise meaning. The CRA's guide RC4028 says it generally means a renovation where at least 90% of the building, other than the foundation, external walls, interior supporting walls, floors, roof and staircases, has been removed or replaced. A kitchen and bathroom update does not reach that line. A full gut renovation of the interior may.

BC's property transfer tax exemption for new homes

BC's newly built home exemption removes property transfer tax on a new home with a fair market value up to $1,100,000 and gives a partial exemption up to $1,150,000. The buyer must be a Canadian citizen or permanent resident, the home must be their principal residence, and the property must be 0.5 hectares or smaller for the full exemption. The buyer does not need to be a first-time buyer.

The province's page also says that if you paid property transfer tax when you bought vacant land, and you now have a newly built home on it, you may be eligible for a refund. If your lot held a house when you bought it, ask your lawyer or notary whether the refund can apply before you file.

This exemption is for newly built homes. The province's list of what counts includes a house built on vacant land and a building converted from a non-residential use, and does not include a renovated house.

Financing changes in the budget

The budget proposes to raise the home price limit for optional mortgage insurance from $1 million to $1.5 million and to allow 30-year amortizations on those insured mortgages, provided that at least one borrower is a first-time home buyer or the home is newly built. An amortization is the number of years it takes to pay a mortgage off in full. This one is still a proposal.

For owners thinking about more than one home on a lot, the budget says new mortgage insurance rules start on February 1, 2027. A builder of a newly built three- or four-unit home could get an insured construction loan for up to 90% of the property's value, with no maximum value and no rule that the builder live in one of the units. Once it is finished, the building could be kept and rented with an insured mortgage of up to 30 years, or the homes could be sold.

What we would do now

If you are deciding between a renovation and a rebuild, add the tax rules to the comparison. A new home can carry the newly built home exemption and, for an eligible first-time buyer, the GST rebate. A substantial renovation can qualify for the GST rebate but not the BC exemption. A partial renovation qualifies for neither.

If anyone in your household is not a citizen or permanent resident, wait for the bill before you plan around the new-home exemption, and budget for BC's 20% tax either way.

If you would like us to price a renovation and a rebuild side by side for your lot, get in touch. We can walk through the scope with you and point you to the questions your lawyer or accountant should answer.