Buying Property in Canada: A Guide for Non-Residents

Buying property in Canada as a non-resident might come with a few restrictions and catches, but it's not impossible. Whether you're planning to make Canada your new home or you're long-distance house hunting for your next overseas investment, buying a property will not be a complicated task if you're familiar with specifics. To help you, you can find everything you need to know about purchasing a property in Canada as a non-resident in this article.

Why should you move to Canada?

Canada is one of, if not the best countries in the world for ex-pats. The fact that many ex-pat communities live all over the Great White North says it all.

A highway in Canada surrounded by autumn trees and a city skyline in the background

Canada is rich in natural resources and has beautiful scenery.

If you want to try living in Canada, here are just some of the reasons that will convince you that moving to Canada is a great idea:

  • Canada is the second-largest country in the world, and it has a lot of open space and stunning scenery. It's also full of natural resources.
  • Citizens of one of the happiest countries in the world are famous for being friendly and kind.
  • Universal healthcare is another great thing about Canada. It's paid by taxes. Even if you don't have a governmental card, all emergency services are free of charge.
  • Canada invests a lot of money in education and offers excellent schools and universities.
  • Low crime rates are another reason why Canada is a great country to move to.

Is buying property in Canada allowed for non-residents?

Not being properly informed is one of the biggest mistakes to avoid when buying a home abroad. Therefore, the first thing to do is to learn about different laws and regulations as they can vary from one place to another.

In general, there are no restrictions for non-residents to buy property in Canada. However, there are some restrictions for foreigners buying agricultural or recreational land.

Also, taxes vary depending on where you're looking to buy a property. For instance, if you are purchasing a property in Toronto, it can be as high as 15% of the property's value.  That is called a Non-resident speculation tax (NRST).

The good news is that, in some cases, you can apply for a rebate. If you become a permanent resident or live and work or study in the region, you can return the funds.

If you are looking to buy a property and rent it out, you might have to pay additional taxes. Before making this kind of investment, it's best to consult with a professional and learn about all the requirements.

Know your residency status

Your residency status is critical when getting the mortgage and learning which taxes you'll have to pay. As it's not always easy to determine, make sure to reach out to a professional who will help you clarify your official residency status.

A passport pages with stamps on them

By knowing your residency status, you'll avoid potential nasty surprises later in the process.

Buying property in Canada as a non-resident - things to know

As buying property in Canada is different for non-residents, here's what you need to know before starting your Canadian real estate adventure.

Applying for a mortgage in Canada as a non-resident

To buy a property in Canada, you may have to apply for and get a local mortgage. It's also very common for banks to require very high down payments from non-residents. They can be as high as 35% of the property value. Also, you'll probably need to prove the source of the funds.

In case you're a US citizen or resident, and you're buying your first home in Canada to live in, banks might offer you a loan with a lower down payment. Usually, it's around 20% which is much cheaper than for non-residents of other nationalities. 

To get a Canadian mortgage, you'll need to open a Canadian bank account, and most banks will require you to visit in person to do this. However, if your bank has a representation in Canada, you might be able to sort everything online.

What documents will you need to apply for a mortgage?

Most banks in Canada will require the following to accept your mortgage application:

  • You'll need to make a deposit which is usually 35% of the value of the property.
  • Your bank should write you a good reference letter.
  • You'll also need proof of income with bank statements that show your spending history.
  • Also, make sure to ask for a letter from your employer which confirms your salary.
  • Lastly, you'll need a Canadian credit check.

Keep in mind that some banks require different documents to be submitted, so we advise you to double-check everything with your bank.

What kind of taxes and fees will you have to pay?

Make sure you're familiar with the financial aspects of purchasing property in Canada before you make your purchase. As the costs differ from one province to another, it's essential to do your research. You'll need to be mindful of potential hidden costs, too.

A cup of coffee next to papers for filing taxes

Learning about tax requirements is one of the most important things to do before buying property in Canada as a non-resident.

Here are the most common expenses you should know about when buying a property in Canada:

  • The seller usually covers agent fees.
  • You will need to pay for legal and notary expenses.
  • If you want to buy a property in the Toronto area, you might have to pay for NRST.
  • Depending on the province, you might have to pay transfer taxes.
  • Make sure to consider annual property taxes, too. However, they are not applied in all provinces.
  • If you plan to use the property as an investment or sell it later, you'll have to count the capital gains taxes, too.

The bottom line

As you can see, even as a non-citizen, buying property in Canada can be relatively easy and stress-free. All you need to do is get in touch with one of Canada's best real estate agents who will help you find a perfect property and experience a smooth process. Good luck with your Canadian real estate adventure!

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