Can US Citizen Buy Land in Canada?
Can US citizens buy land in Canada? Yes, the Canadian real estate market does not restrict non-citizens from purchasing land. The market is open for investors and people who want to build homes and live in the country later.
However, there is a process involved in buying land in Canada for non-citizens. First, you should learn about the taxes both in the US and Canada. Financing and getting a mortgage are also essential steps in acquiring land in Canada.
Foreign land buying is more complicated when doing it alone. To make it easier, involve experts like real estate agents in Canada and accountants from both countries. The accountants help you figure out the tax implications in both countries.
Things to Keep In Mind When Buying Land in Canada
Now that you have the answer to 'can you buy land in Canada as a US citizen,' you can proceed with the purchase. However, some Canadian non-citizens have unrealistic expectations when buying the land. Keep these things in mind to avoid disappointment after spending a lot of money on your land.
Owning a Land in Canada Does Not Help With Canadian Immigration
The Canadian immigration authorities do not consider the property you own in Canada when deciding your immigration and visas. If you want to build a home and live in Canada, you should follow the application process as per the government's citizenship and immigration authorities.
However, the new land will make it easy to build a home upon clearing with immigration authorities. The land is also recognized during the calculations of your net worth.
There Are Restrictions When Applying For Mortgage
Getting a mortgage in Canada as a US citizen might be challenging. The financial institutions expect you to pay 20 percent of the total purchase price as a down payment. Non-US citizens pay about 35 percent down payment, which is higher.
Some banks put a limit on the number of properties to finance. For example, the financial institution could offer to finance up to five lands for non-Canadian residents who want to own properties in the country.
- Non-Resident Speculation Tax For Non-Citizens
Non-Canadian permanent residents and citizens who want to purchase lands in certain areas of Toronto that are part of the Greater Golden Horseshoe Region pay extra tax. The Non-Resident Speculation Tax, NRST taxes, are about 15 percent of the cost of the property.
However, the tax applies to buyers whose land contains a residential property. Therefore, if your land has other properties like commercial or agricultural lands, you will only pay NRST tax for the one holding a family residence.
Mistakes US Citizens Make When Buying Land in Canada
Buying land for the first time can be overwhelming and challenging, which many buyers experience. However, working with professionals and experienced real estate agents in the country can make things easier. Some mistakes to avoid when purchasing land in Canada are;
Handling the Entire Process Alone
Some first-time land buyers do not know the importance of working with a real estate agent, making their land purchasing process in Canada harder. A reliable agent will help you understand the home inspection reports and all the legal contracts.
The agents are also important for non-Canadian resident land purchasers because they give better financing advice. You can buy the land at a lower price because the real estate agents know how to negotiate better.
However hiring real estate agents is costly, but they are worth the cost. Besides, the amount of money you pay the agent is less than what you could lose if you did everything alone.
Not Getting Mortgage Insurance
Mortgage insurance is essential when buying property, especially land. It covers you from potential debt and credit damage. It also gives you flexibility when financing and equity to pay your debt.
Investing in a foreign country needs the land buyer to know all the requirements. Lands are expensive, and you should look for all the possible ways to save, like getting financial assistance from government home buyer programs.
You first need to know the total cost of the land. The cost includes the price of the land, real estate agent fees, taxes, and flat fees and commissions. You should also research the commissions paid by the buyer and the seller and the best agents to use when purchasing your land.
Experienced real estate agents help land buyers to avoid costly mistakes. Besides, since land purchasing is a complicated legal transaction, the agents work as advocates to make your process less tiring and safe for you.
Can US Citizens Buy Land In Canada?
Now that you know that US citizens can buy land in Canada and the mistakes to avoid, you should start preparing for your big purchase. Some of the things to consider during your purchase are;
A US citizen buying land in Canada might not fully understand the tax implications unless they consult a Canadian tax accountant. As a foreigner buying residential property in the Golden Horseshoe Region, you must pay a 15 percent NRST.
However, you will get a rebate on this if a Canadian citizen is involved in the buying process. You will also pay the Land Transfer Tax, which you can get a rebate if you want to use the land as your primary residence.
Ensure you have your finances ready in your Canadian bank to make the transactions easy. Preparing your finances earlier is also important because there are delays in transferring money from foreign accounts into Canada.
Additionally, the exchange rates fluctuate constantly, which means that the real estate market prices also keep rising and dropping. You will pay a deposit of about 5-10 percent of your land's purchase price. The real estate law requires the buyer to pay within 24 hours through bank draft, certified cheque in Canadian dollars, or money order.
It is possible to get a mortgage in Canada as a US citizen. However, ensure you get a licensed mortgage broker to advise you on the best institutions that offer favorable rates and help negotiate the rates on your behalf.
Ensure you also know all the requirements of getting a mortgage in Canada. You must pay a minimum down payment of 35 percent because most lenders offer land buyers a mortgage of up to 65 percent.
You should also get bank statements from your bank, a bank letter, and credit information. Your tax returns will be proof that you can pay the loan. Note that banks have different requirements. The documents required to depend on the bank you visit.
The banks have the same mortgage interest rates for Canadian and non-Canadian citizens, but the main concern is meeting the mortgage eligibility. Other closing costs include insurance, bank appraisal, and inspection fees. These will help you know the total mortgage you need.
'Can US citizens buy land in Canada?' is the most asked question by US citizens who want to invest in Canada. US citizens can buy land in Canada, but you must research the requirements, finances needed, and taxes to pay before making the big investment.