Are you looking to buy a property in Canada as a foreign buyer? Here are four things you should know before starting your home-buying process.
First, you need to know the current rules regarding what a foreigner can or cannot buy, the restrictions and the calculations.
There are no restrictions on what properties a foreign buyer can purchase and the rules are similar to those for a Canadian resident. That means you can buy anything from a vineyard to a luxury home! The thing that matters the most is location as some areas do require a non-resident to pay extra charges such as the Greater Toronto Area. The GTA and other Golden horseshoe cities require a non-Resident Speculation Tax which makes the foreign buyer pay an additional tax of 15% of the property value. However, you could apply for a rebate if you choose to live or work in the region in the future.
Next, you need to look at getting a down-payment.
Banks require foreign buyers to pay larger down-payments than residents normally do. In most cases, it is 35% of the property value along with some type of proof of the source of funds. Once that is done, you will be asked for several documents before you are approved for a mortgage. You will need a reference letter from your bank, bank statements for the past 3 months to prove income, your credit information, a letter from your employer and tax returns to prove you are able to pay your mortgage. Please bear in mind that this mortgage information is of general nature. I am not a mortgage expert. You should always consult a mortgage professional for more accurate information related to your situation.
After that, you will need to remember the fees and taxes applicable.
There are many legal and notary costs to remember, the Non-Resident Speculation Tax of 15% that we just, and annual property taxes which are anywhere from 0.75%-1% of the assessed property value. If you are planning on selling it later on, you will also be charged a Capital Gains Tax if the property is still an investment property.
And lastly, the process of buying a home in Canada for non-residents is same as that for a Canadian resident, regardless of citizenship.
So once you have a down-payment and a mortgage ready, you are prepared to make an offer and get your dream house! If you are out of the country, your agent and you can arrange to see properties on a video call and make note of the properties you've liked. You do not need to come to Canada once the offer has been made and approved but make sure to hire a home inspector and communicate with your agent. Buying a home in a different country isn't hard and you have nothing to worry about as long as you keep everything in mind and do your due diligence.
I hope you found this information useful. If you are planning to purchase a property in the Greater Toronto Area, I can help. You can contact me at 647-834-9928 or send an email to email@example.com
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