Ultimate Property Buying Guide in Canada for Non-Residents

property buying guide in Canada

Canada, a beautiful and second-largest country in the world which is considered the safest destination with a very low crime rate. Canada is a dream country of many because of its natural beauty and constant growth in every sector. Coming to real estate, even non-residents look after buying a property in Canada. If you wonder, how to buy property in Canada for foreigners then no more hassles, today we will be focusing on key points with a complete guide for non-residents buying property in Canada.

Canada is one of the best modern metropolitan countries which offers you a quality life. Well, if you wonder what this quality of life actually bags in? Then let us tell you some wow facts which will crave you more to buy a property in Canada.

What to know as a Non-Resident for buying property in Canada?

It is so important to understand the pros and cons of a place where you are planning to buy a property. Well, if you are a non-resident and planning for buying land in Canada as a foreigner then below are some mind-boggling facts that will make you fall in love with Canada. 

Of course, there are some flaws though, such as nippy winters, distance amidst cities, or Canada non-resident property tax. But these flaws are not faults, you can easily cope with one when familiarized with the place. So before, hunting on properties, let’s first have a trip to joys which will help you find a suitable property you can buy in Canada.

The reason, why, and where should foreigners buy property in Canada:

  • Stunning place with loads of natural beauty
  • Great work-life balance, known for its high standard of life
  • Beautiful and spacious properties
  • Great employment opportunities
  • Constant economic growth in every profession
  • Positive and family-friendly environment
  • Outdoor lifestyle with fun activities
  • Safest amongst many other countries in the world
  • Well-designed, smart, advanced, and clean cities
  • Free basic healthcare service
  • One of the most open-minded country
  • Crime rates are incredibly low
  • Education superpower
  • Rich cultural environment
  • Various welcoming policies for migrants in areas such as health care, clean technology, and artificial intelligence
  • Historical towns, cities, and sophisticated restaurants
  • Wonderfully varied climate
  • Quality public services like feasible convenience, best public transport, and easy navigation
  • Canadians are so welcoming that migrants find it easy to fit in
  • Less pollution
  • Less traffic, space is not a barrier here
  • Great food
  • The USA is just a walking distance
  • Affordable living
  • Magnificent wildlife
  • Respected passport
  • Canada is a creative hub: music, literature, and art are highly valued
  • Canada allows dual citizenship: well, it is a welcoming prize for any migrant

Hold on! You must be thrilled or excited now, right? Well, it is obvious with the list mentioned above. But it is a long way yet to enjoy these pleasures, don’t forget house hunting and buying is still under function. 

A Guide for Non-Resident Buying Property in Canada

Canada is home to various communities as many foreigners visit Canada for vacations or for their short-term studies every year. If you’re also a non-resident and would love to call Canada a second home, but still an immigrant and not a legal resident, or if you’re an overseas trader looking after a great asset or smart investment, you must be thinking to buy a property in Canada.

There are fairly few conditions on foreign or non-resident owning property in Canada. Despite that, some of the areas have a few additional taxes that are charged on foreign home ownership in Canada. This additional tax is to be paid by non-resident buyers to prevent speculation driving up property prices in the real estate market. Also, you must always check on the specifics as per the area you’re hunting your property in, as property norms can vary by city or province. Here’s a broad outline for you to get started.

What to Do as a Non-Resident Before Buying Property in Canada?

Canada has a comparatively open-door policy for all non-residents who are looking to buy a property, and foreigners have the same ownership norms and rights as residents. There are some states that have particular guidelines that need to be followed straight. So below are some things you need to be mindful of:

  • If you are a non-resident and planning to stay in Canada for about six months or less, you will be considered as a non-resident, therefore, if you are planning to stay for more than six months or about a year, you will be required to apply to be an immigrant. 

  • It could be a great help to speak to the lawyer for the paperwork support that is required by the banks of Canada and realtors, and especially if you are not living in Canada at present.

  • In  2017, the Ontario government has brought in the Non-Resident Speculation Tax (NRST), which includes 15% tax on buying a residential property in the area named the Greater Golden Horseshoe in Toronto city by people who aren’t permanent residents of the country. Also, there is another tax “Canada non-resident capital gains tax” which could be applied as per the property norms. There is a few other non-resident property tax Canada which you can understand later as there are several other look-after you need to check on before buying a property.

Choose the place

Choose the place

In a doubt, how to choose the right place where to live in Canada? With beautiful mountainscapes, an endless frontier, modern/thriving cityscapes, rugged coastline. Yes, Canada has everything you are looking for. It’s you who needs to choose which place to live at.

  • Quality of Life: Canada tops the rank as per the Quality of Life Index 2020 which was the survey amongst 20,000 people across 73 nations which was based on nine different parameters that include economic stability, employment, family friendliness, and so forth.
  • Best places to live: The crown of a low crime rate, strong economy, and great weather, goes to Oakville in Ontario. Not only that Ontario is the best place to live, but it is also voted as the best place to live for new Canadian immigrants. Moreover, it is also the third-best place to retire and one of the best places to live with a family.

  • Cost of Living: As per the 2020 Cost of Living Index, Victoria, Winnipeg, and Vancouver were in the top 30 most expensive cities of the world.

  • Property affordability: As per the 2020 Affordability Index, Canada ranked on the 85th number according to the property rates being raised in relation to the other countries in the world therefore, it actually depends on you, in which city you want to live.

  • Climate: The climate of Canada varies greatly, so be sure you look into this sector when hunting for properties.

Connect with a Realtor

Most of the time, house sales are managed through a realtor. Well, this could be good news for the buyers because if the seller is hiring a realtor, he/she has to pay the fees of both, realtors and yours. But makes sure who will pay your realtor fee if the seller is not hiring the realtor. We would recommend you hire a realtor when you are about to buy property because generally, the seller gives your realtor’s fee, and your realtor will:

  • Do some legwork to find out your ideal home
  • Negotiate a good price on your behalf
  • Help you with legal works or contracts

Find a realtor who:

  • Registered at Real Estate Council for your province?
  • Has knowledge of the neighbourhood inside out?
  • Have experience in representing the buyers?
  • Is a full-time realtor? 
  • Take recommendation from someone who’s hired them already

In case, you are not a resident of Canada then you must also make sure you find a realtor who has in-depth knowledge of the non-resident sale of property in Canada.  

Decide the Type of House

Decide the type of house

It’s good to be clear on your part about the type of property you are searching for before you connect with a realtor. 

Be it Detached? Apartment? Townhouse? Other?  And, it is good to be clear about your budget bar, by researching mortgages before contacting the realtor, but be sure you contact a Canadian Mortgage broker, or else you will not be able to utilize a foreign bank to get apply for the mortgage loan.

Once you know your budget, start searching on the internet to see what grabs your fancy. For example, the realtor.ca site lists hundreds of thousands of properties on sale across the whole country. And once you are on your wish list, ask the realtor to preview them to you as it will help you choose the right property in a short time.

What Documents are Required?

If you are not a permanent resident in Canada and still would love to buy a property thereby, here is good news for you. Yes, you heard it right, you don’t require any citizenship or residency to own any property in Canada, besides the below-mentioned documents. 

  • Must have at least 10% of the total property price as a down payment
  • You will be charged with the Non-Resident Speculation Tax which is 15%. 
  • Have a good credit score.

As a non-resident owning property in Canada below are a few documents that you will be requiring to get a mortgage loan. 

  • Proof of your income (employment contract proof, tax returns, and payslips)
  • Bank statements for a down payment (last 3 months)
  • Letter of reference from a non-Canadian bank 
  • An international credit bureau report 

You will be required to open a Canadian bank account for the approval of mortgage payments.

Taxation

There are a few taxes applied on non-residents of Canada if they buy a property in any of the Canadian cities.

  • You will be asked to pay a Non-Resident Speculation Tax (NRST) which is a 15% addition to the purchase cost.  
  • If you are purchasing a property with your spouse who is a permanent resident of Canada, you will not be required to pay the additional tax. 
  • Canadian citizen non-resident buying property in bc: In British Columbia, you will be charged with an additional property transfer tax which is 20% those foreign nationals are charged with when buying a property besides land, apartments with 7 or more units, industrial or commercial properties.

There are specific situations where migrants might get a discount on the Non-Resident Speculation Tax even if you have paid it already: 

  • Property you have purchased is your only home in Ontario and if you enter the property under 60 days of closing. You are eligible to apply for a discount on the NRST tax.
  • If you get a permanent residency within 4 years of purchasing a property. Still you are allowed to apply for the refund (this is only applicable to specific cities. So, you need to check based on the city you are purchasing the property)
  • The non-residents with a legal work permit employed for about 30 hours a week are also eligible to apply.

Well, there is certain non-resident tax buying property in Canada. It might charge other taxes as per the city, province, or property norms.

Financing

The process of closing the deal and putting an offer on the property you are about to buy includes some financial conditions like:

  • Purchase price of the property
  • The deposit amounts
  • Details of mortgage, if taken

Apart from this, there could be other certainties, which could be a request for a home inspection or any item that property includes such as furniture or appliances.

Mortgage

If you require a mortgage, then as a rule of Canada Mortgage and Housing Corporation (CMHC), your monthly housing cost must not exceed 30% of your total monthly income. Including your mortgage monthly payments other debts, it shouldn’t be more than 40% of your total monthly income.

If you are looking for a mortgage loan, then you must connect with a Mortgage broker in a city where you want to purchase a property.  You can also speak to the Mortgage experts from the banks of Canada.  And here is the list of the biggest 5 banks in Canada:

  • RBC- The Royal Bank of Canada 
  • TD- the Toronto-Dominion Bank 
  • The Bank of Nova-Scotia
  • BMO- the Bank of Montreal 
  • CIBC- the Canadian Imperial Bank of Commerce

Unfortunately, you are not eligible to use a foreign bank to process your mortgage. 

Insurance

If you are about to take a mortgage loan on the property. Most of the Canadian banks will ask you to for a down payment of about 35% or more of the total property price. These banks will also ask you to get house insurance before they finalize the mortgage loan.

Home Inspection

A home inspection is the utmost part of property purchasing in Canada. Though a home inspection is not legally mandatory we recommend you not risk buying a property without getting it inspected. Home inspectors are governed in some of the provinces but not in every province. So choose the property and home inspectors with full consciousness. We suggest you not rely on one suggested by the seller itself.

Buying a Property Helps your Immigration to Canada?

Canada is a welcoming country that does not limit foreigners buying a property with any PR restrictions. You can own a property in any province or city of Canada without having a permanent residency. You are allowed a temporary stay as a non-resident. In case you are looking for a permanent stay in Canada then buying a property could be an add-on. But you will be required to comply with the immigration process under government guidelines to get a permanent residency in Canada. 

Selling Property in Canada as a Non-Resident

As a non-resident, selling property in Canada you will be required to go through the procedure same as a permanent resident of Canada. But without proper guidance, it might be a tough and long process that could end with significant penalties.

Non-resident sale of property in Canada has the same procedure all over the country be it:

  • British Columbia Non-resident property selling

  • Non-resident selling property in Ontario

Canada has the same procedure for non-residents selling property as for permanent residents of  Canada. No matter which city you can simply follow the below-given procedure to sell your property in Canada as a non-resident.

  • The buyer will be asked to withhold 25% of the total buying price or 50% in some specific cases

  • The seller should inform CRA about the proposed sale by claiming the certificate of compliance. These due must not take 10 days after the final sale closing. The fine for late filing goes from $25 per day to $2,500, even if you do not owe any taxes. If the property is mutually held, in such cases there are chances of multiple penalties.

  • The CRA will seek compensation in order to remunerate the resulting taxes and release a certificate of compliance. As per our experience, the CRA takes about 4 months in processing the forms and releasing the Certificate of Compliance. Also this deadline can vary from Province to Province.

  • based on the receipt copy of the Certificate of Compliance. The buyer could release the payment retained from Step 1 to the non-resident.

  • You will be asked to file a Canadian tax return as a non-resident, in order to report the sale at the end of the calendar year.

Note: If the buyer of the property does not receive a “comfort letter” or a Certificate of Compliance from the CRA, they will be asked to remit the payment retained from Step 1 to the CRA under the period of 30 days when the property was purchased. The failure to put off the custody to the CRA by the due date might result in the form of a penalty to the buyer. Equal to 10% or 20% of the total amount that was needed to be remitted.

Conclusion

The above detailed is a foreigner’s property buying guide Canada along with the procedure of selling property in Canada as a non-resident. Canada is a beautiful yet welcoming country in all the aspects one wants to live their life as, be it culture, growth, climate. In addition to this Canada also does not require you to have a PR if you wish to buy a property there. It, just a few taxes if you search for property in Canada without having citizenship. Also, Canada helps you get a mortgage to buy a property at your favorite location there that includes each small financial detail, and insurance. Not just this, but you will easily get home inspection and realtor facilities to be sure with your all paperwork. 

Also, if you doubt your stay extension in Canada after buying a property, that is not a problem even. You can get PR after following the government rules which may vary as per the province or the city in Canada. 

FAQs

Can a foreigner build a house in Canada?

Yes, a foreigner can build a house in Canada, there are no limitations on non-resident tax buying property in Canada. Also, there is no such barrier of citizenship if you want to build a house in Canada.

Can I move to Canada if I buy a house?

If a non-resident buying property in Quebec or in any other province of Canada, You can always occupy a temporary based residence. You are required to meet all the specific immigration standards if you want to move permanently to Canada. 

Can I get PR if I buy property in Canada?

You can buy property in Canada without being a permanent resident, but the property doesn’t entitle you to provides an additional advantage of PR to the non-resident owner. But you can always get PR by fulfilling all the required criteria of the government.