Non-Resident Commercial Real Estate Investment: Alberta vs Ontario

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For non-residents investing in Canada, contact our law firm at Chris@NeufeldLegal.com - 403-400-4092 / 905-616-8864

Investing in commercial real estate as a non-resident requires a shift in strategy compared to residential assets, as the tax and regulatory hurdles change significantly. While Ontario's aggressive foreign buyer taxes largely target residential units, the commercial landscape in both provinces is shaped more by land transfer fees, sales tax structures, and specific zoning regulations. In 2026, Alberta continues to position itself as a low-barrier alternative to Ontario’s more expensive and highly regulated commercial hubs.

A critical distinction in 2026 is that Ontario’s 25% Non-Resident Speculation Tax (NRST) and Toronto’s 10% Municipal NRST generally do not apply to purely commercial properties, such as office buildings, industrial warehouses, or retail strips. These taxes are specifically triggered by "designated land" containing one to six residential units. However, if a non-resident invests in a mixed-use building in Ontario that includes a residential component, the NRST may still be prorated and applied to the value of the residential portion. Alberta remains entirely free of provincial foreign buyer taxes for all asset classes, providing a much simpler closing process for international capital.

The financial "friction" of entering the market is substantially higher in Ontario due to its Land Transfer Tax (LTT) system. For commercial acquisitions, Ontario charges a provincial LTT on a sliding scale that reaches 2% for the portion of the value over $400,000. If the property is located within the City of Toronto, a second municipal tax of the same magnitude is applied, effectively doubling the cost to roughly 4% of the total purchase price. Alberta, by contrast, uses a registration fee system; as of late 2024 and through 2026, the fee is a modest $5 per $5,000 of property value plus a $50 base fee. For a $10 million commercial building, the Ontario/Toronto taxes could exceed $390,000, while Alberta’s fees would be closer to $10,050.

Non-residents must be aware of Alberta’s Foreign Ownership of Land Regulations (FOLR), which restrict non-Canadians from owning "controlled land." This regulation primarily targets rural and agricultural land outside of urban boundaries, limiting foreign entities to two parcels not exceeding 20 acres in total. However, commercial investors are usually safe because land within the boundaries of a city, town, or village is exempt from these restrictions. In Ontario, there are virtually no provincial restrictions on the quantity or location of land a foreign corporation can own, provided the entity is properly registered to carry on business within the province.

The ongoing cost of managing a commercial asset is influenced by the differing sales tax regimes. Ontario operates under a 13% Harmonized Sales Tax (HST), which applies to almost all professional services, including third-party property management, legal fees, and capital repairs. In Alberta, there is no provincial sales tax, meaning investors only pay the 5% federal GST on these services. While many commercial landlords can "flow through" these costs to tenants via triple-net (NNN) leases, the lower tax burden in Alberta can make the "all-in" rent more competitive for prospective tenants, potentially reducing vacancy risks.

Alberta offers the lowest corporate tax environment in Canada, which directly impacts the net proceeds for non-residents investing through a Canadian subsidiary. The combined federal and provincial corporate tax rate in Alberta is 23%, whereas in Ontario it is 26.5%. For a high-yielding commercial portfolio, this 3.5% difference in the tax rate can significantly alter the internal rate of return (IRR) over a 10-year hold period. Non-residents often prefer the Alberta structure because it allows for greater capital reinvestment or higher dividend distributions back to the parent entity.

The commercial sectors in each province are driven by different economic engines, leading to varied risk-adjusted returns. Ontario’s market is dominated by the Greater Toronto Area (GTA), which serves as Canada’s financial and tech heart, offering high liquidity but lower "cap rates" (yields) due to intense competition. Alberta’s market, particularly in Calgary and Edmonton, often provides higher yields to compensate for historical volatility tied to the energy sector. In 2026, Alberta's industrial and multi-family sectors are seeing record demand due to a massive influx of residents and businesses relocating from higher-cost provinces like Ontario.

Both provinces require foreign-controlled corporations to obtain an extra-provincial license to hold title to real estate and conduct business. In Ontario, this involves a relatively straightforward filing under the Extra-Provincial Corporations Act. In Alberta, the process is similarly routine, though the province requires more granular disclosure of the "ultimate beneficial owners" during the land title registration process to comply with transparency initiatives. While neither province is "difficult" to enter from a corporate setup perspective, Alberta’s overall "red tape" is often perceived as lighter, with more streamlined municipal permitting for commercial renovations and developments.

For knowledgeable and experienced tax, investment and corporate law representation for non-residents looking to invest in Canada, whether through active business enterprises, passive income investments or real estate investments, we welcome you to contact our law firm for strategic legal advice to optimize your commercial interests in Canada at Chris@NeufeldLegal.com or call 403-400-4092 / 905-616-8864.

Comparative Commercial Real Estate Investment - Alberta vs. Ontario (2026)

Feature	Alberta (e.g., Calgary, Edmonton)	Ontario (e.g., Greater Toronto Area, Ottawa)
Foreign Buyer Tax	0% (no provincial tax)	0% (generally exempt from NRST for pure commercial)
Land Transfer Tax	None (registration fee system only)	0.5% - 2.5%
City Transfer Tax	None	Up to 7.5% (Toronto Municipal LTT)
Registration Fees	approx. $50 + $5 per $5K value	Nominal (standard filing fees)
General Corporate Tax	23% (federal + provincial)	26.5% (federal + provincial)
Capital Gains Inclusion	66.7% (standard for corporations)	66.7% (standard for corporations)
Sales Tax (PST/HST)	5% GST only	13% HST (impacts service & management costs)
Rural Land Limits	Restrictive (FOLR limits rural parcels)	Permissive (no specific rural limits)
Cap Rates (average 2026)	Higher (5.5% - 7.0%)	Lower (4.5% - 6.0%)

Real Estate Investment Comparatives of key Canadian provinces - Residential Real Estate: Alberta vs Ontario, Alberta vs British Columbia; Commercial Real Estate: Alberta vs Ontario, Alberta vs British Columbia.

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