PLEASE NOTE: THE COMMENTS CONTAINED IN THIS QUESTIONS AND ANSWERS SECTION ARE FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.
1 – I am not a Canadian citizen, ie: I’m an American citizen, can I buy land in Ontario?
Yes you can. You are treated just like a resident buyer. The bottom line is that buying real estate in Canada is very easy.
2 – Are there any unusual taxes or levies for a non-resident buyer?
No. Sometimes if the property is being sold by a company or by a person who is in the business of buying and selling land, a Harmonized Sales Tax (HST) of THIRTEEN PERCENT (13%) of the purchase price is applicable. This tax is collected by the lawyer and remitted to the Canadian Government. If applicable, this tax is paid by the buyer, whether they are Canadian citizens or not. Depending on the Seller, sometimes the HST is included in the purchase price.
3 – Who handles my closing?
In Canada, closings are done by Canadian lawyers, the buyer has a lawyer and the seller has a lawyer. We recommend that you should get a lawyer from the jurisdiction or district you are buying in.
4 – Do I have to come to Canada to purchase a property or to attend the closing of my purchase?
No. You can purchase property from wherever you are in the world and your lawyer will handle your closing for you. To take ownership of the property (we call that “closing”) you can do that with a notary public in the country you are in… your Canadian lawyer can walk you through the steps of what is required.
Where do I find a lawyer who can help me with the purchase as a non-resident?
We work with some excellent lawyers and by clicking on Lawyers in the green box on our home page, you will be guided to some of Canada’s finest.
5 – How do I sign the offer paperwork?
You don’t need to sign any of the offer paperwork in person. You can sign in any of three ways:
1. You can scan and email or fax back the signed document.
2. You can sign the paperwork via a program we use called DOCUSIGN with an electronic signature.
3. As of July 1, 2015, electronic signatures are legal in Ontario,so if you’re working with a tech-savvy REALTOR (like us!), you’ll be able to sign the legal offer paperwork on a tablet or smartphone.
6 – What is a deposit and how do I pay it?
After you’ve made an offer on a property in Canada, you’ll need to provide a deposit. The amount and time frame to pay it is spelled out in the offer to purchase. That deposit is held in trust by the listing brokerage and forms part of the down payment when it comes time to take possession of the property. You can arrange to send the deposit by money order, certified check, e-transfer or from outside of Canada, a wire transfer.
7 – How much will my lawyer cost? What are the closing costs?
Land Transfer Tax (LTT): This is collected by the lawyer and remitted to the Provincial Government.
For calculating this tax, the purchase price is converted to Canadian Dollars.
The formula for this tax is $5 per thousand for the first $55,000
$10 per thousand for the next $145,000
$15 per thousand on any amount over $250,000
example:
for a purchase price of $50,000 the LTT would be $200 Cdn..
For a purchase price of $80,000 the LTT would be $525 Cdn.
Disbursements: This would include, long distance call, courier costs, title searches photo copies,stamps, seals etc. Typically these costs average in the $250 to $300 Cdn range.
Legal Fees: This fee would be what the lawyer actually charges you for his time to handle your transaction. This fee would be what you negotiate with the lawyer. It is a good idea to check with 2 or 3 lawyers as some are more negotiable than others. They all have to do the same work and guarantee title for you. Their job is to ensure that you are actually buying the property you think you are.
He reviews the Title Search on the property with you, explains the terminology and ensures that you have clear title to the property. Typical costs would range from $700 to $1,500 depending on the amount of work required.
Please Note: YOU SHOULD ALWAYS CHECK WITH A LAWYER TO FIND THEIR SPECIFIC FEES TO HANDLE YOUR PURCHASE OR CLOSING.
8 – Do non-residents pay a different rate of land transfer tax when purchasing real property in Ontario?
No. The residency of the transferee is not relevant to the amount of land transfer tax paid on the purchase of an interest in land in Ontario. A non-resident pays land transfer tax at the same rates as a resident.
9 – Do non-residents pay a different rate of land property tax when they own a property in Ontario?
No. The residency of the owner is not relevant to the amount of property tax you pay. A non-resident pays property taxes at the same rates as a resident.
10 – Buying property in Canada. How do I go about doing it?
Once you have found your property, an offer is made and once accepted, a deposit is payable. When buying a property in Canada, an offer must be made in writing so that all aspects of the transaction are clearly outlined within the offer. Once you (the buyer) have signed the document, it becomes legally binding. If you withdraw from the offer at this stage, you may lose your deposit and may also be sued. Make sure that every item staying in the property, eg. carpets, fixtures and appliances, is written on the offer as ‘chattels included’. Your realtor should also insert two clauses stating that the offer will only proceed subject to building inspection and that you as the buyer are able to meet your financial obligations. Once your offer is complete it will be presented to the seller and negotiations are made. This may include changes in price, completion date and chattels. The changes are initialled by the seller and returned to you (the buyer) for your initials. The resulting Agreement of Purchase and Sale will state the purchase price and the deposit. The deposit is placed in a trust account and is credited towards the purchase price once the offer has been accepted by both the seller and the buyer and the transaction is complete.
11 – What about selling my property that I own in Canada?
When a non-resident sells Canadian real estate, he/she is required to pay the appropriate amount of taxes on any capital gain. However, a non-resident is required to hold back an amount equal to 25% of the SALE PRICE. This amount is to be retained by the seller’s lawyer until such time as a clearance certificate is received from the Canada Revenue Agency (CRA) in connection with the sale of the property. Upon payment, the CRA will issue a clearance certificate to the seller. The wait for the certificate is usually 6-8 weeks. The non-resident seller should file a Canadian income tax return for the year in which the sale occurs and should expect to receive a refund of a portion of the money held back.
Many countries, such as the U.S., have tax treaties with Canada that prevent you from being taxed in both Canada and your home country. It is advisable to contact a tax accountant in your country for more information.
12 – What about residency issues?
If you stay in Canada for six months or less each year, the government considers you a tourist or non-resident. (Americans don’t need a visa to enter the country. ) That means that you can do just about anything – open a bank account, buy land, a car. Purchase stocks or bonds – except vote.
Americans who live in Canada for more than half the year but who don’t want to apply for working authorization simply leave Canada every six months. Each time they return, the six month “tourist” period begins again. There’s no limit on the number of times you can go back and forth across the border. For more detailed information contact Canada Customs and Immigration.