Non-Resident Looking for Mortgages in Canada? Read This
Great news! Foreigners can certainly purchase property in Canada. The Canadian real estate market welcomes non-citizens outside the country, including former residents and investors. There is no limit to the type or amount of property which can be bought, even in Toronto.
If you are not a citizen of Canada, you are considered a non-resident and may have the opportunity to invest in property in Canada. There are many considerations to consider when investing in real estate, and it's best to consult with an experienced real estate professional or broker to ensure you’re getting the best private mortgage for your situation.
Legally, non-Canadian residents are defined as:
Individuals who do not have Canadian residence status and are not considered permanent residents. These people may live in another country regularly, either temporarily or permanently.
Someone who may have visited Canada throughout the year but did not stay for a total of 183 days or more or have not lived in Canada at all.
Find Properties with This Guide
Before beginning a search for a property in Canada, enlist the help of reputable professionals such as real estate agents and mortgage brokers. Take time to identify a competent investment consultant. Consultants can provide helpful information and connect you with professionals who can ensure your needs, expectations, and goals are met, especially concerning taxation and financing.
Taxation: If you are not a Canadian citizen, permanent resident, foreign company, or taxable trustee, then buying a property in most provinces of Canada will be subject to a 15 percent Non-Resident Speculation Tax (NRST).
It is important to consult with a Canadian tax accountant to ensure you understand the tax implications of buying or selling a property in Canada. They will have the professional knowledge and experience to advise you best on your tax situation. This is aside from dealing with your private mortgage with a financial consultant.
However, the Non-Resident Speculation Tax has certain exemptions and rebates that can be taken advantage of. If you qualify for either of these, you should look into the information provided by the Non-Resident Speculation Tax to see if it applies to you.
If a person who is a citizen of Canada is buying something, they may have certain rights or privileges that other people may not have.
Land Transfer Tax (LTT) is a type of tax that applies to both foreign buyers and Canadian residents. First-time buyers may be eligible for a rebate on this tax if the property purchased is used as their primary residence. Property and income taxes also need to be paid.
If you aren't a citizen or resident of Canada and are selling a property, you must pay 25 percent of the property's sale price in taxes to the Canadian Revenue Agency (CRA). This is called a non-resident withholding tax. You must fill out forms and follow certain procedures, or you may face penalties. More details about these taxes can be found on the CRA's website.
Before you embark on your journey to purchasing a property in Canada, it’s wise to ensure your funds are ready and secure. It's recommended that you open a bank account in Canada and transfer your money into it so that it's available when needed. You must go to the bank and provide the credentials to open the account.
You should also be prepared to provide a deposit for the purchase, typically five to ten percent of the property's purchase price. This should be in a bank draft, money order, or certified cheque and Canadian dollars. This must be done within 24 hours, as market conditions can change quickly, and you don't want to lose out on an opportunity.
Bottom Line
Remember what you've learned today if you’re a non-Canadian resident looking to buy a home or investment. Follow all laws and regulations to prevent hefty fines or penalties from securing the best property for your family’s or personal use.
Invest with Level Up Mortgages Today
Level Up Mortgages is a mortgage broker team focused on helping the self-employed, new immigrants, non-residents, and investors, access best rate and alternative lending in Canada. We have been nominated for best up and coming broker in Canada in 2021 and have been on CTV News and various publications because of our education-first approach to helping you always stay a step ahead of the process. Reach out to us for access to our first-time buyer course or a mortgage strategy session. Visit our website to avail of your private mortgage in Canada!