Buying an Ontario cottage as an American or non-resident

It can be done, but two sets of rules apply: a federal ban on foreign buyers in some areas, and an Ontario tax on foreign buyers everywhere. Here is how they fit together as of October 2026.

Where the federal foreign buyer ban applies

The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act has been in force since January 1, 2023. It was extended in 2024 and is scheduled to expire on January 1, 2027, unless the government extends it again. Confirm the law for the closing date with the lawyer.

The ban only applies to residential property inside a census metropolitan area (CMA) or census agglomeration (CA). Many cottages in places like Muskoka, Haliburton and the Kawarthas sit outside those boundaries, so the ban does not apply to them. But some cottage towns are inside a CA. Your lawyer should confirm the exact address, using the government’s CMA and CA lookup, before you make an offer.

The 25% NRST explained

Ontario’s Non-Resident Speculation Tax applies to foreign nationals, foreign corporations and taxable trustees buying land with one to six single-family homes. The rate has been 25% since October 25, 2022, and the tax has applied across the whole province since March 30, 2022. It is charged on top of the regular Ontario land transfer tax.

Even if a cottage is outside the federal ban area, the NRST still applies. That is the part that surprises most American buyers.

A worked example

On top of that come legal fees, inspections and other cottage closing costs. Some exemptions and rebates exist for specific situations, such as certain buyers who are spouses of Canadian citizens or permanent residents. Ask your lawyer whether any apply to you.

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Mortgage options for non-residents

Fewer lenders offer mortgages to non-residents, and those that do usually ask for a larger down payment than a Canadian resident would need. Mortgage default insurance for second homes is generally built for Canadian residents, so expect to put down well over 20%. Lenders will also want:

• Proof of income, often tax returns from your home country
• A credit report from your home country, since you may not have Canadian credit history
• Proof of the down payment and where it came from
• A Canadian bank account for payments

The property itself also has to qualify. Year-round road access, permanent heat, safe water and an approved septic make financing much easier. Island and water access cottages are harder for anyone to finance. See water access and island cottage financing.

Taxes after you buy

• Underused Housing Tax. This federal tax hit many non-Canadian owners from 2022. Legislation enacted March 26, 2026 removes the tax for 2025 and later calendar years. Returns for 2022 to 2024 may still be owed.
• Rental income. Canada has special withholding and filing rules for non-resident landlords. Get advice before you rent the cottage out, and check the township licence rules too. See renting out your cottage.
• Selling. Non-residents who sell Canadian real estate face withholding and clearance requirements. Plan for this with your advisor long before you list.
• Estate planning. A cottage owned across the border can create tax in both countries when it passes to the next generation. See passing the cottage to your kids.

Canadians living abroad and mixed families

The NRST is aimed at foreign nationals, meaning people who are not Canadian citizens or permanent residents. A Canadian citizen who lives in the United States is not a foreign national, though living abroad can still affect your mortgage and your taxes. Lenders treat non-resident Canadians much like other non-residents, because income and credit are outside Canada.

If an American and a Canadian buy together, ask your lawyer exactly how the NRST applies before you sign. The answer depends on who is on title and the relationship between the buyers, and getting it wrong is expensive. If you plan to share the cottage with family in Canada, read buying a cottage with family or friends for how to set up ownership.

Picking a property that suits a part-time owner

Most American owners use their cottage for a few weeks or months a year and are a long drive or flight away the rest of the time. That shapes which cottage makes sense:

• Year-round road access so a caretaker or contractor can reach it in winter.
• A local property manager to check on it after storms and through the cold months. Insurers often have conditions for cottages left empty.
• Simple systems. A well documented septic, a tested water system and a reliable heat source mean fewer emergency calls from across the border.
• Reasonable distance from the border crossing you use most.

Your checklist

1. Confirm your status: citizen, permanent resident or foreign national.
2. Have a lawyer check whether the address is inside a CMA or CA.
3. Budget for the 25% NRST plus land transfer tax.
4. Talk to us about non-resident financing before you shop.
5. Get cross-border tax advice on renting, selling and estate planning.

Ready to talk it through? Get started here, or read how to buy a cottage in Ontario for the full process.