Yes, they can.
Short blog post, right? Sorry to kill the suspense! Hmm, maybe you’d like to know more about how to start the process? Let’s dig deeper.
Why Invest in Canada?
Foreign investment into real estate in Canada can be incredibly lucrative, or if you’re looking for a vacation home, incredibly relaxing! After all, few places in the world are as beautiful as Northern Ontario, and many non-residents would love to own a cottage up there for a Canadian getaway. If you’re attending a post-secondary institution in Canada, your parents might wish to purchase a property for you, rather than deal with rentals. Of course, some simply want to invest in properties, hoping to see a significant return on their investment.
If you’re a foreign investor or someone looking to have a part-time home in Canada, the great news is there are few, if any, restrictions on the types of property you can buy. Non-residents are welcome to invest their money into the Canadian real estate market. However, there can be some differences between provinces and how non-residents are treated regarding taxes and fees. Let’s take a closer look.
For a Canadian citizen, down payments scale depending on the purchase price of the property or home. Generally, if a home is $500,000 or less, they must pay 5% of the purchase price as a down payment. If it’s between $500,000 and $999,999, they must pay 5% of the first $500,000 and 10% for the portion above $500,000. And if the purchase price is $1 million or more, they must put a down payment of 20% of the purchase price. These numbers can change if the buyer is self-employed or have a poor credit rating.
If you are a non-citizen, these numbers are a bit different. If you’re from the U.S. and plan to use the property personally, your down payment must be, at minimum, 20% of the purchase price. If you’re from anywhere else in the world, your down payment must be at least 35% of the purchase price. Both groups must provide proof of income and the ability to make the down payment.
Depending on where you wish to purchase your property in Canada, non-residents can face additional taxes as a foreign buyer.
For example, there can be a 15% tax on property values for non-residents called the Non-Resident Speculation Tax (NRST) in the Greater Toronto Area. These taxes can sometimes be reimbursed if you live in the property, if you are here on a work or student visa, or eventually become a permanent resident. If you plan on purchasing a property with the intent to rent it out, there may also be additional taxes for non-residents.
Land transfer taxes might also be in effect, depending on the province. Annual property taxes can also be in effect at around .75% to 1% annually. You may also need to pay vacancy taxes, though we don’t have these in Ontario.
Capital gains taxes come into play if you are investing in a property to make a profit. These can be around 25% at the point of sale.
To qualify for a Canadian home loan, you will need an account with a Canadian bank. Logical, right?
This restriction means that the purchaser must make at least a few trips to Canada prior to purchasing to set up their bank account. If, however, your primary bank is a large, international organization, you may be able to open a Canadian bank account through them, meaning that you can avoid too many costly visits.
Fees can vary, depending on where in Canada you wish to purchase the property. You may need to pay for legal representation and notary costs. If you plan on selling the property, later on, you will need to pay agent fees to your realtor.
You should also be ready to purchase insurance as a condition of most mortgages. Doing so can be tricky for non-residents, but certainly not impossible if you connect with the right people.
If you’re a foreign investor looking to purchase property in Canada, it can be extraordinarily helpful to have experts here in the country, helping you every step of the way. That’s what Regalway Homes does! We can help you build your wealth through foreign investment in Canadian real estate. We have development projects across Canada, including in some up and coming regions.
To learn more, we invite you to book a consultation with us today. If you want to purchase property in Canada, there are no better partners than Regalway Homes!