How To Buy Real Estate Property In Canada

Real estate in Canada looks attractive from the outside as well as from within the country. With many Canadian cities, including Toronto and Vancouver, being rated among the most desirable places to live in the entire world based on such criteria as health care, education, public transit, diversity, and green spaces, it’s no wonder that it makes sense from an investment point of view to purchase Canadian property from abroad.

Sunset behind a Condo by Andrew Rivett
Sunset behind a Condo by Andrew Rivett

Whether you plan to make Canada your permanent home now or in the future; relax in a vacation home in our lush cottage country; make your home-away-from-home a convenient urban flat, or simply buy an income-producing property for investment purposes, buying Toronto real estate is generally speaking easy for foreign buyers. Understanding the issues involved in purchasing, leasing, financing and selling a property in Canada will assist you in properly assessing the risks and rewards associated with these types of investments.

The following information applies to non-residents of Canada – and it’s interesting to note that residency does not necessarily have anything to do with citizenship. Even a Canadian citizen will usually be treated as a non-resident if they live in Canada less than a total of 183 days in the year, or has no permanent home in Canada but instead lives abroad.

 

Prospective immigrants to Canada, often lured to our friendly shores by soaring property prices in the U.K. and Europe, find it easy to travel here to get a feel Toronto Wards Island by Daniel Thorton for real estate opportunities by taking advantage of the affordable direct airfares now being offered by such online discounters as FlightNetwork. Once they have decided on a city, toured different neighbourhoods and viewed properties in person, they are usually pleased to find that there are no restrictions or limits on the amount of property they can buy.

banks and credit unions will finance your

Local lenders such as chartered purchase subject to credit approval (though if you don’t work in Canada, they may require a cash downpayment of at least 25%) so there’s no need to bring a whole suitcase of cash with you. Depending on where you take your business, you may need to provide a letter of introduction from your banking facility in your own home country; your previous income in the home country will also be verified. For more information on beginning a relationship with a Canadian financial institution, please visit the Citizenship & Immigration website.

If you will be purchasing commercial property, GST (Goods and Services Tax) registration may be required.

An added bonus when seeking full immigration (as opposed to ‘visitor’) status: the purchase of a home shows a connection to Canada, and the property is ultimately treated as a part of your overall net worth.

Foreign investors who are purchasing solely for investment purposes and have no plans to live in their Canadian property, but hope to sell it in future for a large capital gain, would be wise to speak to an experienced accountant about all the implications.

The property buying process itself usually runs smoothly, especially when working with reliable real estate professional.

Vertical Limit by Paul Bica
Vertical Limit by Paul Bica
 

One thing’s for certain: non-residents are required to have 25% of the gross rental income of the property withheld and remitted monthly to the Canada Revenue Agency within fifteen days of each month-end, either by the tenant, or by a Canadian representative appointed by the foreign investor. Failure to withhold this tax and to file a tax return can result in stiff penalties.

Buying your piece of Canadian real estate may have been easy and unrestricted, but there are a few things to take note of – besides the profits - when the time comes to sell your property. It’s essential to have a trusted real estate agent guide you through the process. Even after signing on the dotted line, much must be done to ensure a smooth closing.

Non-resident sellers should be aware of the following tax obligations:

  • Non-residents are subject to the same Land Transfer Tax on their sale transactions as paid by Ontario residents (the former 20% non-resident tax has been repealed)
  • There are deductions to the Land Transfer Tax that may apply for non-resident first time home buyers who plan to use the property as their principal residence within nine months of completing the purchase
  • Non-residents must notify the Canadian government via a sale notice within ten days of the completion of the sale transaction, to obtain a certificate of compliance showing that the CRA has received either a prepayment of the taxes owing or appropriate security for the prepayment. If the sale notice isn’t filed, stiff penalties apply.
  • In the next year following completion of the sale, non-resident property sellers can file a tax return and hopefully obtain a refund for a portion of their provable improvement expenses, legal fees, Realtor commissions, survey fees, etc., with respect to the property; consult an Ontario Accountant for assistance in preparation of this return
  • Read more about the tax obligations for non-resident vendors disposing of real property in Canada on the CRA site.

Where an advocate comes into all this, is to help the non-resident property buyer with such things as obtaining fire insurance (a must for mortgage lenders, and something that can be more difficult to obtain for non-residents); providing Power of Attorney services if you will not be in the country for the closing; referring legal and financial representation you can trust; and helping you navigate the ever-changing immigration and tax laws.

14 thoughts on “How To Buy Real Estate Property In Canada

June 1, 2012 at 8:05 am
ajmal says:

Do residents have to pay tax on buying and selling property in Canada?

June 2, 2012 at 9:17 am
Jamie Sarner says:

Hi Ajmal,

There are a few different taxes that a Buyer or Seller can have to pay in Canada.

Land Transfer Taxes are provincial taxes levied on real estate changing hands, and are the responsibility of the purchaser. Depending on where you buy a house, the taxes can range from 0.5% to 2% of the total value of the property.

Many provinces have multi-tiered taxation systems, which can be a little complicated. If you purchase a property for $260,000 in Ontario, for example, 0.5% is charged on the first $55,000; 1% is charged on $55,000 to $250,000, and 1.5% is charged on $250,000 to $400,000.

A Seller may be subject to capital gains tax when selling investment properties. I would recommend speaking to an accountant prior to selling a property that is not your principal residence to find out the potential tax implications.

Feel free to email me directly at mail@jamiesarner.com for further information.

Thank you,

Jamie

September 19, 2012 at 4:02 am
Khalid says:

Hello Jamie,

Your article was very useful to me. I wanted to ask that if I pay 25% down payment for the property would my rental income (after tax) take care of my mortgage payments? How can you help me on that?

Regards
Khalid

October 8, 2012 at 2:19 am

If you are an EU citizen you do not need a visa, and you can visit for 3 month at the time. You can also apply for a Student Visa if you are accepted at one of our schools. But watch out for scams!

October 9, 2012 at 11:25 pm
sanjeet says:

DEAR JAMIE
THERE ARE A FEW QUESTIONS I WOULD LIKE TO ASK YOU KINDLY DO EMAIL THEN TO ME
A}I AM LOKING FOR A PROPERTY IN VANCOVER,TORONTO,AND THEIR SUBERBS,NOVA SCOTIA,EDMONTON,ANYWHERE IN MANITOBA,SASKETHWAN.
B} MY BUDGET IS BETWEEN 70000 TO TO 150000 CAD.
C}AFTER THE PURCHASE DO I QULIFY FOR SOME SORT OF RESIDENT STATUS TO LIVE IN CANADA,WITHOUT IT IT WOULD BE A USELESS PROCESS.
D}WHAT ARE THE TAXES I WOULD HAVE TO PAY UPON PURCHASE AND THE ANUAL TAXES AFTER PURCHASE I WOULD BE BOUND TO PAY.
E}WHAT WOULD BE YOUR COMMISSION WHEN THE DEAL IS MADE THROUGH YOU.
F}WOULD I BE ELLIGIBLE TO GET MY PROPERTY FINANCED IF YES WHAT WOLD THAT BE.IE. I WOULD THEN BE ABLE TO AFFORD A PROPERTY{RESIDENTISL} UPTO 220000 CAD .
G}I AM FROM INDIA AND PLAN TO BUY THIS FOR MY WIFE. SHE IS ABSOLUTELY FASINATED BY CANADA AND SHE CALLS IT COOL COOL CANADA.
I} ONCE AGAIN THE MOST IMPORTANT QUESTION WOLUD MY WIFE QUALIFY FOR SOME SORT OF RESIDENT STATUS, PERMISSION,OR ELLIGIBILITY FOR THE CANADIAN IMMIGRATION DEPARTMENT TO ALLOW HER TO STAY THERE?

IT WOULD BE NICE TO HEAR FROM YOU SOON AT YOUR CONVIENCE

October 12, 2012 at 8:37 pm
Nargis says:

Hi, I want to know if my husband is not in Canada and I buy a property in his name can he come to Canada for visit?

October 23, 2012 at 11:49 pm
hariharkumar says:

Dear Sir,

My son is a canadian citizen of indian origin. He is in Canada for the past 10 years. I propose gift cash (through official channels) for purchase of a house worth say 300,000 Canadian dollars. My queries are
1. Will the gift money be taxed by treating it as my son,s income?
2. Is it possible to register it on my name and my son as a joint owner, so that on my demise there are no transfer issues to my son,s name.
3. On buying a property on my name , will I get a visitors visa for a duration of 3 months.

Shall be grateful for a reply.

Harihar

October 28, 2012 at 2:34 am
Pascal Hayek says:

Dear Jamie,

I am a Canadian citizen living abroad. My son is studying at McGill. What is the best way to do if I am interested to buy an appartment in Montreal. Can I apply for financing? My idea is that since my son is paying $ 750 for rent, wouldn’t it be wiser if I buy an appartment instead?

Best regards,

Pascal

February 3, 2014 at 2:47 am
Jatinder Gill says:

I am a Canadian Citizen working abroad and have Non resident status
My son is studying at U of Ottawa.My question is can i buy him an apartment on his name so i do not loose my non resident status and if there are any implications

June 28, 2014 at 11:23 pm
Dr Avtar Singh says:

Dear Jamie,
I recently visited Canada on a visitor visa. I want to buy a residential or an commercial property in Calgary. Please advise if I pay 25 percent in advance can I get the bank loan or what r the other expenses, please let me know.
I am from India.

August 6, 2014 at 5:03 am
daoud says:

hello
I am algerian ,I want to buy house or apartment ,can that helpping me for immigration or visa ? all that for studying
thanks

August 18, 2014 at 9:49 pm
Olukayode says:

I want to buy a holiday property in Canada. My daughter has just secured an admission into a college in Hamilton. I will need your advice in this. Kindly contact me or send me your details to enable me speak with you. I am currently in Canada till the end of the month. Thanks.

August 19, 2014 at 4:44 am
Jamie says:

Hi Olukayode,
Thanks for stopping by! I’ll contact you via e-mail and we can discuss your situation over the phone – my number is 416.588.3286.
Regards,
Jamie

September 12, 2014 at 6:27 am
wayne says:

My wife is separating from me and we are just 45 days from possession of a house we were building. With that said my friend in the UK would like to now take her place on the mortgage. I have already paid 5% down on a $500k house. Just wondering how this would work and if it is doable. Oh and I live in Calgary
Thanks
Wayne

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