Did you know that purchasing real estate in Canada as an investment is one of the safest and simplest ways to invest? As the world becomes smaller so does its global economy making international purchases easier than ever before.
Our Ryan Taylor real estate team is specialized in dealing with out-of-town purchasers and investors. We make this process a smooth one that helps you profit. One way we do this is by offering video tours for potential properties for non-present and out of country investors. Another way we do this is by providing every possible detail regarding residency, tax laws and purchase costs for you. Whether you are from China, India, Russia, Great Britain or Australia we have the tools and know how to get you a home in British Columbia that fits your needs and goals. Our real estate team offers total representation of all real estate dealings and can get the job done while you sit at home with your favorite beverage.
International Home Buyers & Foreign Investment into BC Real Estate
Buying a home for sale in British Columbia and particular homes for sale in Surrey, White Rock, Langley, Vancouver and other Lower Mainland neighborhoods, is a great investment strategy for many. There are several key laws and regulations that you should be aware of when considering buying a home in Canada as a non-resident.
1. British Columbia and Canadian Residency Laws for Home Owners
You will be considered by law a “non-resident” if you live in Canada for six months or less a year. Non-residents are still able to open a bank account and buy a property or home; Canadian laws are pretty relaxed in this matter. However, if you plan to live here for more than 6 months each year you must apply for immigration status.
2. Foreign Real Estate Investment Caps
In British Columbia there is no cap on the amount of foreign real estate ownership one can possess. This non-existent cap on ownership plus the continuous rise in value of real estate makes BC a highly desired and highly lucrative province to purchase real estate. Please note that other Provinces do have real estate caps on ownership and it is important to do additional research if you plan to purchase a home outside of British Columbia.
3. Obtaining a Mortgage in Canada as a Non-Resident
For a non-resident of Canada you will generally need a minimum of 35% of the purchase price for a down payment. Obtaining the mortgage may be effortless for some and more work for others, depending on your credit, financial status, the country you come from, how long the money has been in Canada and where the money came from. Canadian Mortgages can be obtained the same here as other places in the world and through the phone, fax, and email. Be prepared to provide personal information about your employment, income and assets. We have Canadian Mortgage Brokers prepared to work with foreign investors – simply complete our Contact Form and we’ll set you up. You should start transferring the money now if you are seriously considering the purchase as some banks can take 48 hours or more to properly transfer the money.
4. Documents and Identification Required to Buy a Home in BC
By Canadian Law you will need proof of identification at various steps throughout the buying process, whether you obtain a mortgage or purchase a piece of property with cash. To obtain a mortgage you will generally need some kind of proof of income via tax returns, or bank statements. A passport along with another government issued I.D. should be sufficient for I.D. needed.
For the purchase of the property and for the mortgage you will also need to fill out a FINTRAC form. If you are present at the time of the application or offer you can fill out the FINTRAC with the appropriate broker. If you are not present during the offer or application you will need to take the FINTRAC forms to an appropriate professional like a Lawyer or a Doctor. Its generally very easy to fill out and not expensive to complete.
International Property Selling for BC, Canada
As a non–resident property owner you are required to pay Canadian Taxes. In fact, a non-resident is required to pay an estimate of the tax before sale, which is an amount of 25% of the gain. The 25% is to be retained by the Seller’s Lawyer and held until there is a clearance certificate issued by the Canadian Revenue Agency (CRA) for the subject property. This clearance letter or certificate will not be issued until the sale of the subject property has reached the point of subject removal or all the conditions have been removed and before the buyer has taken legal possession of the property. The seller will not receive the full amount until after the contact of sale has completed and the title has transferred.
Any non-resident seller can file a Canadian income tax return for the year in which the sale occurs and can expect a refund for a portion of the taxes they had to pay in the sale. If the subject property was used for rental income, 25% will be charged in tax on the gross rent.
It is in your best interest to discuss these matters with your tax accountant. If needed we can provide the name of an accountant who can go over all of the details regarding all tax implications so that you are fully informed of your investment decision in Canadian real estate. Depending on what country you are from Canada may have a tax treaty with your country which exempts you from being taxed again from your homeland. This eliminates you from being taxed twice – both in Canada and in your home country.
Real Estate Taxes in British Columbia, Canada
The following is a basic outline of Real Estate taxes you can expect to pay in British Columbia as a foreign investor:
Property Transfer Tax: 1% of the first $200,000 CDN & 2% on the remainder. If you are a first time home owner you are exempt from this tax. To qualify for the first-time owner tax exemption as a foreign investor you cannot have owned property from anywhere around the world and you must be a Permanent Resident of Canada or a Canadian Citizen, lived in the province of purchase for over 1 year, filed 2 Canadian Tax Returns within the last 6 years, and must immediately occupy the property for 1 year after purchase.
The Property Transfer Tax Act as amended imposes an additional Property Transfer Tax of 20% of the fair market value of any residential property being purchased by a Foreign Entity.
Luxury Tax: A tax of two per cent applied to the fair market value of a property transaction that exceeds $3-million. And that’s on top of an existing three per cent tax on the fair market value of a transaction above $2-million.
Clearance Certificate: Paid by the seller and can range from $300-$1,000 CDN depending on the complexity of the sale.
Capital Gains Tax: (Will not affect you if on your principle residence) Basic equation 50% of profits will be added to your annual income and taxed as personal income.
Good and Service Tax (GST): 5% GST is charge on newly constructed homes. New home buyers of homes under $350,000 can apply for a partial rebate of this tax as long as the home will be the purchaser’s primary residence. Homes between $350,000 and $450,000 CDN have a smaller rebate that can be applied for and no rebates are available over $450,000 CDN.
Property Tax: This is an annual fee levied with local communities. There are many different amounts of tax you may have to pay depending on the area. We can help you determine how much you will have to pay when viewing the homes you are interested in purchasing. Different homes in different areas will all have different taxes and will be taxed appropriately in correlation of the property’s assessment value.
Miscellaneous Fees on BC Real Estate
Realtors® Fees:If you purchasing a property there is absolutely no fee to obtain a Realtor.
Lawyer’s Fees: Lawyers in BC, Canada will review the offer of purchase, search the title, draw up the mortgage documents and tend to the closing dates. Typical Legal Fees for these services are between $500-$2000 CDN.
Home Inspection Fees: This protects you from purchasing a home with defects not found by the untrained eye. This typically will cost anywhere from $450-$800 CDN depending on the size and the condition of the home.
Strata Fees, Service Charges for utility hook ups
Property Insurance may also be applied to the total charges of purchasing your property.
Do You Want to Buy a Home in British Columbia Soon?
No matter what your goals are for purchasing property in this country, we’re dedicated to working hard for you and finding you what you want. We are educated and certified professionals with extensive experience in dealing from out of country purchasers. You can trust us to give you above ordinary service and professional work ethic in all and every dealings with us.
Ask us about our video tours we provide for our out of town non-present purchasers and investors!
Contact Ryan Taylor from Sutton Group West Coast Estates for neighbourhood specific expertise.