Category: Foreign Buyers

We’ve previously written about how the Nova Scotia Non-Resident Deed Transfer Tax may impact foreigners hoping to buy land in Nova Scotia. But here we’re discussing a different type of legislation (the federal government’s Prohibition on the Purchase of Residential Property by Non-Canadians Act, which came into effect Jan 1, 2023). This Act is far more impactful on the ability of foreign residents to buy land in Nova Scotia. And for a change, there’s good news to share.

Today the CBC posted an article titled “Federal Government eases some restrictions on non-Canadians purchasing property.” The government is walking back restrictions that were passed into law earlier in 2023. 

Here’s some good news. People from outside Canada who have a work permit or are allowed to work here can now buy a home. Just make sure you have 183 days or more left on your permit and only buy one property.

What about buying vacant land? Yes, one of the included amendments repeals the existing provision so that foreign buyers are not prohibited from buying vacant land.  The zoning of the plot of land is important. Non-Canadians and foreign businesses can now purchase vacant land that is zoned as residential or mixed use. After purchase, the vacant land can be used for any purchase by the buyer, including development of residential properties. 

This is a welcome change as we are in the midst of a housing shortage crisis in Canada, particularly in areas like Nova Scotia that are seeing high levels of immigration. Allowing foreign residents to purchase vacant land in Nova Scotia, and develop into affordable housing, will help reduce market pressures and support Nova Scotia’s economic growth. 

If you’re ready to start your journey to buy land in Nova Scotia, we recommend starting with our Guide: How to Buy Land in Nova Scotia – it’s loaded with advice for first-time land buyers in NS and written specifically for someone shopping from a distance. In it, you’ll also find links to the various Nova Scotia land use bylaws and zoning maps, statistics on land sales in Nova Scotia, and so much more. 

 

(Note: this post deals with the provincial deed transfer tax affecting foreign buyers. View this post for information on the repeal of restrictions for foreign buyers purchasing vacant land in the Federal Prohibition on the Purchase of Residential Property by Non-Canadians Act)

 

Effective April 1, 2022 the Province of Nova Scotia introduced a non-residential deed transfer tax. It is described as a measure to make home ownership for Nova Scotians more accessible. The tax amounts to 5% and is paid as deed transfer tax when a property changes hands. 

 

So what about vacant land? Vacant land is subject to the 5% transfer tax if it is classified as “residential”. To my understanding, this includes all land except land classified as “resource” or “commercial”. Most individuals aren’t buying vacant land classified as commercial, however the “resource” classification is not uncommon. On forested lands, there can be a percentage split between “residential” and “resource”. 

 

There are some exceptions, for example if you plan to move to Nova Scotia within six months. You can see full details here. Unfortunately, most out-of-province buyers will be dinged with this new tax. To give an example of the difference, let’s take the average vacant land sale price from our recent post on Nova Scotia vacant land sales statistics: $72,250. There’s a deed transfer tax calculator on wowa.ca. So, on that $72,250 purchase, an out of province buyer is paying $4,696.25. A Nova Scotia resident, in contrast, would pay $1,083.75.

 

So congratulations to Premier Tim Houston –  you’ve chased off a whole class of buyers that were ready and eager to invest in Nova Scotia. Many of these buyers are also developers, with an interest in building on vacant land. Are they building luxury vacation homes so they can helicopter in on weekends, eat caviar and splash around in the pool? No, most that I know are looking to build… wait for it… affordable single-family homes. This new housing would then be sold on the market, providing a much-needed boost in the amount of homes available for local buyers. 

 

With this new tax, many developers will simply look elsewhere. Nova Scotia’s production rate of affordable housing will be limited to the slow pace provided by local economies. It’s a penny-wise-pound-foolish approach designed to win popularity points with voters who tend to perceive “outsiders” as the problem for whatever ails them. 

 

According to a CBC article, there are about 28,000 non-resident property owners in Nova Scotia. Of these, 42% hold vacant land. It’s not a large number for a province the size of Nova Scotia, and the vacant landholders in particular are not to blame for a shortage of affordable housing in Nova Scotia.

 

The legislation brought a lot of negative attention to the Nova Scotia government, leading them to pull back on another component: the non-resident property tax. And the distaste for the new taxes wasn’t limited to foreigners. As one Nova Scotian commented online: “Everyone except the xenophobic types saw this as the bad idea it was.”