Non-Residents

Purchasing a property in Canada

  • There are no restrictions for non-residents to purchase real estate in Canada.
  • No tax implications or extra fees at time of purchase
  • Non-residents can purchase as many properties as they wish in Canada
  • For rental properties non-residents must file Canadian tax return

 

Arranging a Canadian Mortgage for Non-Residents

  • Banks and lenders usually require non-residents a minimum 25-50% payment. It is possible to arrange financing with less than the 25% down payment however these lenders charge a higher rate of interest.
  • Personal information required including – assets/liabilities, employment/income verification, tax returns, credit bureau or bankers reports, down payment confirmation, identification and real estate appraisal
  • You will need to open a Canadian bank account for mortgage payments to be drawn from
  • You will require the services of a Canadian lawyer or notary public to prepare mortgage documents and registration at the Land Titles office

 

Non-Residents Selling a Canadian property

3 stages in the collection of income taxes associated with the sale of real estate by non-residents

  1. Initial withholding Amount – 25% of gross sale proceeds until clearance certificate is received by Canadian Customs and Revenue Agency in connection with the sale of the property
  2. Clearance Certificate – application made to CCRA. Upon receipt the funds being withheld is reduced to 25% of the capital gains on the property
  3. Filing of Canadian Income Tax Return – Income tax return must be filed for the year in which the sale occurs.

 

 

When Calculating capital gains tax for Clearance Certificate Purchases sellers can only claim:

  • The original purchase price
  • Property transfer tax
  • Legal fees and disbursements on the original purchase
  • Cost of furnishings included in the sale
  • Strata corporation special assessments
  • GST on the original purchase price
  • Mortgage interest (if appropriate elections on the tax return have been filed to have the mortgage interest capitalized)

 

Capital Gains Tax

  • Only 50% of the capital gain is taxable
  • Clearance certificates can take 6-8 weeks to be obtained
  • If sale completes before the clearance certificate is issued, 25-50% of the selling price will have to be held back from the seller’s proceed until certificate issued
  • Non-residents are encouraged to contact a Canadian accountant or CCRA for further information on marginal tax rates for non-residents.

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