Foreign Ownership
As of April 21, 2017, any individual who is not a Canadian citizen or permanent resident of Canada (including corporations and trusts) is subject to a Non-Resident Speculation Tax of 15% of the purchase price (paid at closing) for properties purchased in Toronto, Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York.
Financing
While Canadian lenders do finance the home purchases of non-residents, they usually require significantly larger down payments. Most of our non-resident clients are required to have a 35% downpayment. Lenders will require you to verify your income and creditworthiness and prove that you can pay the mortgage. Also, mortgage interest rates may be higher than what Canadian residents would pay (though in our experience, they are still very attractive rates). It’s important to connect with a mortgage broker or your financial institution to find out your qualifications.
Taxes
As with any investment, it’s important to contact your accountant to understand fully how the purchase or sale of a property in Canada will affect you from a tax perspective. The following is meant to be a guideline only:
Non-Canadian citizens and non-permanent residents of Canada buying a property in the Toronto region must pay a 15% tax on closing.
When buying a property in Toronto, foreign buyers pay the same land transfer taxes as Canadian residents. First time home buyers who plan to use the purchase as their primary residence may be eligible for land transfer tax rebates.
There are also tax implications for non-residents when selling a property. There are forms, processes, and penalties for not complying with the Canada Revenue Agency (CRA)’s rules.
Insurance
It’s sometimes difficult (and more expensive) for non-residents to obtain insurance for an investment property. Given that proof of home insurance is required to obtain a mortgage, this is an important factor to consider. If you’re looking to buy a Toronto investment property, make sure to get insurance quotes and information before making an offer.
Making an Offer
In this day and age, signing the legal documents to make an offer on a house or condo can be done digitally, and with Skype and Facetime, it’s easy to get the same price advice and information from your REALTOR that you’d get if you were physically in Toronto. Many lenders require a foreign buyer to sign the mortgage paperwork in person (though this can be avoided with an executed Power of Attorney).
Choosing a REALTOR
Look for a real estate agent who has experience selling properties to non-Canadians and can refer you to property managers, lawyers and appropriate lenders for your circumstances. If you’re looking to buy a Toronto property while overseas (vs. during a trip to Toronto) look for a REALTOR who is experienced in previewing properties for absentee clients and who is familiar with the tools and technology (especially video) to ensure a smooth process.
We work with a lot of overseas clients and have perfected a process to video and communicate with our buyers about potential properties to eliminate the need to be physically in Toronto to choose a property to buy. We have a dedicated team of lenders, lawyers, and insurance brokers who help our non-resident Buyers in Toronto.
Can I Purchase A Home In Toronto as a Non-Resident?
As of April 21, 2017, any individual who is not a Canadian citizen or permanent resident of Canada (including corporations and trusts) is subject to a Non-Resident Speculation Tax of 15% of the purchase price (paid at closing) for properties purchased in Toronto, Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York.