Canada’s reputation is consistently ranked among the highest in the world. For years, people around the globe have sought out ways to immigrate to Canada or invest in its economy.
Canada’s real estate market has sparked global interest over the years, as many have wanted to invest their wealth in Canada’s secure economy and gain some extra cash.
However, Canada’s Federal Budget 2022 has announced the government’s intention to restrict foreign investment for two years. This is due to the negative impact it has had on Canadians unable to compete with foreign investments and secure homes for themselves.
Nonetheless, as it currently stands, foreign investment in to Canada’s real estate market is open to global investors.
But can anyone purchase property in Canada? This blog will outline who can own property in Canada and what you need to know as a foreigner.
Can I buy property as a non-resident?
One of the major appeals to the Canadian real estate market, is that there is no rule that you must be a Canadian citizen to purchase property. Whether you are a citizen of Canada, a resident or non-resident living in another country, you can own land in Canada.
A Canadian non-resident is an individual who routinely resides in another country throughout the tax year, or has spent less than 183 days in Canada. They do not have permission to reside in the country on a permanent basis.
If you fall in to this category, you can rest assured that you are still able to become a home owner in Canada. There are no restrictions on the type of property or how much property a non-resident can own, however there are other conditions which may make the process slightly more complicated.
While the privilege of owning property in Canada is a benefit for many, it does not come without its challenges. Whether a non-resident is purchasing for investment purposes or as a new residence, there are major implications such as non-resident taxes, conditional mortgages and obtaining a Canadian bank account that must be taken in to account.
There are various different tax implications to be aware of as a non-resident purchasing property in Canada. Provincial and municipal taxes vary depending on the location of the property, and it might also be subject to the Goods and Services Tax (GST) based on the assessed value. There is also a Non-Resident Speculation Tax in Canada, which varies depending on location. In British Columbia for example, foreign non-resident buyers are subject to an additional tax of 2% of the purchase price.
Furthermore, if you are purchasing property for investment purposes and collect income from it, non-residents might be subject to additional taxes. It is a good idea to consult a property lawyer to find out exactly which taxes you will be paying, so you are not unpleasantly surprised!
Obtaining a mortgage and financing from a Canadian bank is also another important consideration for potential non-resident home owners. Canadian financial institutions are strict when it comes to providing sufficient documentation to prove your income, down payments, credit scores, etc. Often to secure a mortgage, they will require a larger minimum down payment compared to Canadian residents (at least 35%) with a maximum amortization period of 25 years.
Nowadays most properties can be viewed virtually and it is often unnecessary to physically be in the country to secure a purchase. Most signing can be done with a notary in your home country or via a certified electronic signature platform. However, it is a good idea to budget a visit to Canada if you plan on obtaining a mortgage from a Canadian bank and open a bank account. Most major Canadian financial institutions require in person identification verification and signatures.
While buying a house in Canada for non-residents has many incentives, it is a good idea to speak to a property lawyer in Canada before making the purchase. This will ensure you understand all of the legalities and requirements of the transaction.
Can foreigners buy property in Canada and get a permanent residency?
There’s no doubt that immigrating to a new country is a complex process. There are multiple avenues and programs of immigration in to Canada and each has its own restrictions and processes. There are many factors and variables that affect an immigration application and contrary to popular opinion, owning real estate in Canada is NOT one of those factors.
A permanent resident is someone granted permission to live and work in Canada on a permanent basis. They are able to purchase property in Canada for recreation and non-recreational purposes, however they are not Canadian citizens and must fulfill certain obligations to maintain their status.
Although owning Canadian property will surely increase your overall net worth and prove your attachment to the country, it does not give applicants for permanent residency any additional advantage. You must still meet all of the eligibility requirements, regardless of home ownership in Canada.
Since Canada’s market has been kept open to all residents and non-residents alike, it has always been a source global interest. Foreign money has poured in to the Canadian market over the years and has been very impactful on the economy.
As such, buying or selling property in Canada has become complex for Canadian citizens, let alone non-residents. With housing prices soaring across the country, the real estate market has become one of the most expensive in the world. Canadians are facing a lack of supply and cannot compete with foreign investors taking up homes that should be available to Canadians.
The Federal Budget 2022 has proposed restrictions on foreign investment and it will be interesting to see the forthcoming effects on Canada’s market on a global scale.
If you are looking to purchase real estate in Canada, it is a good idea to speak to a property lawyer. They will be able to break down current legislation and ensure you understand all of the possible forthcoming restrictions on foreign investment.
Let Titan Law assist you with your real estate transaction. We are expert immigration and real estate lawyers in Vancouver and would be happy to answer all of your questions!