This topic seems to come up often in the media as of late so I thought I would address some of the rules and considerations associated with non-resident home ownership in Canada.
There are currently no restrictions for non-residents purchasing real estate in Canada.
The following taxes will, however, be owed on the transactions:
1. Good and Services Tax - The Canada Revenue Agency applies a tax of 5% GST on new construction or substantially renovated homes. More information on specific situations can be found at www.ra-arc.gc.ca
2. Property Transfer Tax - In BC this tax rate is 1% on the first $200,000 of the property’s fair market value and 2% of the balance. For complete details visit www.rev.gov.bc.ca/rpt
3. Property Tax - If the seller has already pre-paid the entire year’s worth of property tax, the buyer will be responsible for reimbursing them for the remainder of the year.
Once in Canada, if non-residents stay for longer than 182 consecutive days in the country, they may be subject to Canadian income tax laws. Generally, non-residents pay income tax on monies received from sources within Canada.
If a non-resident is selling property in Canada they must notify the government within 10 days of completion of the transaction. They will subsequently be issued a certificate of compliance if all taxes owing have been paid or funds secured to do so. Penalties will be issued if notice of sale does not occur within the 10 day period.
As with any policy, there are exceptions. More details can be found at www.ra-arc.gc.ca/E/pub/tp/ic72-17r6/README.html
Frequently Asked Questions
Can a non-resident get a mortgage and if so how does one qualify?
Non-residents can apply, and become qualified, for a mortgage providing they have the following:
-Minimum of 35% down payment
-Employment letter
-Canadian credit check
-Reference from a financial institution
-Past bank statements
The interest rate on the mortgage will be the same as the rates given to residents. If the applicant doesn’t meet the eligibility requirements, financing may be available from other sources although the interest rates may be higher.
Does a Non-Resident need to be physically in Canada to purchase property here?
The following taxes will, however, be owed on the transactions:
1. Good and Services Tax - The Canada Revenue Agency applies a tax of 5% GST on new construction or substantially renovated homes. More information on specific situations can be found at www.ra-arc.gc.ca
2. Property Transfer Tax - In BC this tax rate is 1% on the first $200,000 of the property’s fair market value and 2% of the balance. For complete details visit www.rev.gov.bc.ca/rpt
3. Property Tax - If the seller has already pre-paid the entire year’s worth of property tax, the buyer will be responsible for reimbursing them for the remainder of the year.
Once in Canada, if non-residents stay for longer than 182 consecutive days in the country, they may be subject to Canadian income tax laws. Generally, non-residents pay income tax on monies received from sources within Canada.
If a non-resident is selling property in Canada they must notify the government within 10 days of completion of the transaction. They will subsequently be issued a certificate of compliance if all taxes owing have been paid or funds secured to do so. Penalties will be issued if notice of sale does not occur within the 10 day period.
As with any policy, there are exceptions. More details can be found at www.ra-arc.gc.ca/E/pub/tp/ic72-17r6/README.html
Frequently Asked Questions
Can a non-resident get a mortgage and if so how does one qualify?
Non-residents can apply, and become qualified, for a mortgage providing they have the following:
-Minimum of 35% down payment
-Employment letter
-Canadian credit check
-Reference from a financial institution
-Past bank statements
The interest rate on the mortgage will be the same as the rates given to residents. If the applicant doesn’t meet the eligibility requirements, financing may be available from other sources although the interest rates may be higher.
Does a Non-Resident need to be physically in Canada to purchase property here?
These days a prospective buyer doesn't need to be in the country to purchase a property, this can be done over the computer most of the time.
Acquiring a mortgage in a Canadian financial institution is a different story.
The applicant is required to physically be present when opening an account.
All documentation associated with the sale and purchase of a property can be signed and scanned and then emailed back and forth.
Does buying a house help in the case of immigration to Canada?
All documentation associated with the sale and purchase of a property can be signed and scanned and then emailed back and forth.
Does buying a house help in the case of immigration to Canada?
Buying a house does not increase chances of entry, but nor does it hurt. The purchase of a home certainly shows a connection to Canada and the home is ultimately treated as a part of the overall net worth of the individual, but simply owning a house and living here as a visitor will not affect the selection process.
What other costs can be expected upon closing?
The purchase price of the home and associated mortgage payments is only part of the cost incurred when purchasing a home. These are other costs that need to factored in:
Appraisal Fee – When the lending institution requires an appraisal of the home before approving your loan, the appraiser collects a fee.
What other costs can be expected upon closing?
The purchase price of the home and associated mortgage payments is only part of the cost incurred when purchasing a home. These are other costs that need to factored in:
Appraisal Fee – When the lending institution requires an appraisal of the home before approving your loan, the appraiser collects a fee.
Mortgage Application Fee – Lending institutions may charge a mortgage application fee. This application fee may vary between lending institutions.
Life & Disability Mortgage Insurance – At your option, you may purchase insurance which will ensure that your outstanding mortgage balance is paid if you die or become disabled.
Life & Disability Mortgage Insurance – At your option, you may purchase insurance which will ensure that your outstanding mortgage balance is paid if you die or become disabled.
Fire & Liability Insurance – The mortgage lender will insist that one purchases an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortgage loan before any insurance proceeds are paid out.
Legal Fees – The transfer of home ownership from the seller to the buyer must be recorded in the Land Title and Survey Authority Office in order to protect the new owner’s interests. The lawyer or notary public hired will charge a fee for service.
Other last-minute costs that need to be taken into consideration:
-home inspection fees
-moving expenses
-deposits required by utility companies
Other last-minute costs that need to be taken into consideration:
-home inspection fees
-moving expenses
-deposits required by utility companies
