A Quick Guide to Foreign Ownership
Right now in Canada, and particularly Toronto, Real Estate has become very attractive to international buyers because of its steady economic growth and reliable financial systems.
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Here are some helpful tips on becoming an International buyer in Canada in 2018:
The Rules
The Canadian Government gives Canadian residents as well as Non-Canadian residents the same rights; to buy, sell and rent property without any limitation. Non-residents are also eligible for Canadian bank loans associated with the property they’re purchasing.
What is a non-Canadian resident?
The government does not consider you a resident of Canada unless you live in the country for more than six months out of the year.
Financing
Even though non-residents are eligible for Canadian bank loans they do have different rules when it comes to payment. As a Canadian resident, the requirement for a down payment of a home is 5% of the total purchase price in order to receive financing. When you’re a non-resident, you must pay a 35% down payment. Mortgage companies will require non-residents to prove that they’re financially capable of paying the mortgage with proof of income and good credit.
Taxes
Non-residents are expected to pay the same amount in Land Transfer Tax as residents, but there are deductions that may be available to first-time buyers’ whether they’re residents or non-residents. There are also rebates available if you plan on living in the purchased property within nine months of the closing date.
When selling a property as a non-resident there’s a ‘withholding tax’ in the amount of 25% that must be paid to the Canadian Revenue Agency within ten days of the closing date to receive a ‘certificate of compliance’ that proves payment. There are payment penalties owed if the money is not provided to the Canada Revenue Agency within the ten days. The penalties are as follows:
3% – 1-3 Days Late
5% – 4-5 Days Late
7% – 6-7 Days Late
10% – More than 7 Days Late
*If you’ve been penalized for a second time within one year, you’re eligible for an additional 20% penalty payment.
Once paid, the money is then held by the Canadian Revenue Agency until the following year when the seller can file a Canadian tax return and potentially obtain a refund from the taxes paid.
Finding a Toronto Realtor
It’s always important to work with a Realtor who understands your wants and needs and has a wide range of knowledge regarding different types of real estate. When picking a realtor as an International Buyer, it’s also important to make sure your realtor has experience and knowledge working with other International buyers. This will help make the process less challenging. Your realtor will also be able to refer you to many Canadian companies and professionals you’ll need who are specialized in dealing with non-residents (Lawyers, Accountants, Mortgage Companies, etc.).
Would you like to know more about the process of becoming an international buyer in Canada?
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