How to Buy Real Estate in Canada as a Non-Resident
It’s a common practice for many foreigners living in Canada to want to purchase their own properties on Canadian soil. Fortunately due to some fairly relaxed laws, buying and retaining ownership of real estate in Canada is certainly feasible. If you’re an expat, international traveller, global scholar, or a foreign investor, you may be looking to make Canada a home away from home.
Even though Canadian property has the ability to turn into either a worthwhile investment or personal property, it’s important to understand the legal rulings beforehand. Having a firm grasp of the basic possible restrictions and tax implications in this situation can put you miles ahead of other foreign potential buyers.
A SHORT GUIDE TO BUYING CANADIAN REAL ESTATE FROM OUTSIDE THE COUNTRY
We’ll provide you with a few introductory fundamentals on how this is possible to get you started on the right track. Hopefully we’ve managed to answer some of your most frequently asked questions below.
Please note: this information is not meant to be a substitute for professional or expert legal advice. We highly recommend supplementing your research with alternate sources to achieve a greater level of understanding. It’s also advised that you consult with a professional on this topic before following through on your decision to buy.
Am I able to buy Canadian real estate from outside the country?
In short, yes but the rules may vary depending on your location. Make sure you check not just the federal rulings on buying Canadian property as a non-resident, but also the provincial regulations as well.
Different provinces and territories may have different laws surrounding the matter, especially when it comes to property being used for agriculture, recreation, or income generation.
Are some parts of Canada more restrictive than others when it comes to buying land?
As a foreign purchaser you may feel more limited in your pursuit of overseas property in certain parts of Canada. For instance, the Greater Horseshoe Region (which consists of the Greater Toronto Area among neighbouring municipalities) insists on taxing you a 15% property value fee, NRST (Non Resident Speculation Tax), at the onset of the purchase.
However, it’s worth mentioning that you can apply for a rebate in the future if your personal relationship with Canada improves. In other words, if you end up working or studying in Canada, or achieve permanent residency, you may be compensated for the NRST.
How big should a non-resident down payment be for Canadian property?
Since much of Canada’s property is expensive, it may be in your best interest to take out a mortgage. This is a very normal procedure, and it may be necessary to buy a home in the Greater Toronto Area. A general rule of thumb for non-residents going through a Canadian bank is to provide a 35% down payment.
In many cases, banks are willing to offer US residents more leniencies on the down payment. If you can provide proof that you reside south of the border, either as a resident or a citizen, the bank is more likely to accept a 20% down payment.
What paperwork is necessary for non-residents to buy Canadian property?
Assuming you’re going through the traditional mortgage route of financing a home, a bank will ask for the following documentation as standard protocol:
- Proof of funds for the down payment
- Your current banking statements from your primary bank
- An official Canadian credit check
- Your employment status/employer name/income and spending histories
What sort of fees are there for non-residents buying Canadian property?
As we have mentioned previously, the exact nature and amount of fees or taxes paid during a foreign real estate purchase depend on your unique situation. Most importantly, where the property is located – make sure to read each province’s terms and conditions.
- Real estate agent commissions (anywhere from 1% to 5% of the property value) although this is mostly a concern for when you decide to sell the property
- Legal dues and notary charges
- Non Resident Speculation Tax (NRST) for GTA and neighbouring real estate
- Provincially-dependent land transfer tax
- Property tax paid on a yearly basis (a certain percentage of your property’s value each year)
- Taxes on capital gains if the property is treated as an investment
The Best Financial Solution for Foreign Real Estate Purchases
If you want to save money when purchasing Canadian property, you’ll first need a cost-efficient exchange from your local currency into Canadian dollars (CAD).
At Knightsbridge Foreign Exchange, we offer the best exchange rates to help you keep more money in your wallet. Best of all, our services can be accessed from anywhere online, just fill out the registration form on our website to get started.