Canada is one of the few countries that opens its borders to foreigners to become citizens after meeting specific requirements. Canada has attracted people from all over the world who come to work, study, or live. It is not uncommon for such people to consider buying a property in Canada, especially someone who needs a brilliant investment opportunity.
Buying properties for non-residents in Canada comes with some restrictions. In addition, you will need to pay additional taxes. Here’s a guide on how to go about it:
Are foreigners allowed to buy property in Canada?
While there are no general restrictions on foreigners buying a home in Canada, some provinces have a few restrictions. You might be charged an extra fee as a foreign buyer. An additional tax of 15% on the property’s value is known as NSRT – Non-Resident Speculation Tax.
If you neither intend to become a citizen of Canada nor plan to live in the house, there may also be additional taxes.
How much will a non-resident pay as a down payment?
While you need a local mortgage to secure a property in Canada, banks will charge non-residents substantial down payments. This is set at 35% of the property value, and you might need to prove the source of the funds.
For people interested in Canadian home loans, having a Canadian bank account is essential. As a result, one needs to be physically present at the bank to set up the account. This makes it necessary to come down to Canada as part of the purchase process.
Documents non-residents will need to secure a mortgage
Documents vary from bank to bank, making it essential to know what you need as a non-resident. Typically, most banks request the following:
- An initial 35% deposit of the value of the property
- Letter of reference from your bank
- A letter from your employer revealing your salary
- Proof of your income alongside your bank statement
- A credit check from Canada
Essential Tax and Fees
Many things determine the exact fee you will pay for the property, like the value and location. Make sure to understand the rules on taxes for the specific province you are interested in. Some of the typical costs to factor in your preparation are:
- Agent fees, usually covered by the seller
- Notary and legal cost
- You might pay land transfer taxes depending on the province
- 15% of the property value as NSRT
- Vacancy taxes apply in some provinces – an annual property tax on the estimated value of the home.
- For people who intend to sell the property later, capital gains taxes apply.
Property in Canada for many non-residents is a dream. They might want it as a second home, an investment, or a place to live after becoming a resident. There are a couple of legal restrictions that you will come across, but you can navigate them all.
Ensure you are aware of all essential details of the province you want to live in. We can take the hard work out of getting a property in Canada. Let us help you find your dream BC property! Contact us today https://cascadiarealty.ca/contact-us/