Everything you need to know as a non-resident when buying property in Canada

There are many countries around world in which non-residents are under restrictions when they want to buy property in them. Maybe you ask yourself if everyone can buy a house in Canada. The answer is yes. Canada’s real estate market is open to anyone from abroad including; investors, entrepreneurs, expats and also normal people living beyond the country’s borders who’s planning to live in the country and it doesn’t really matter how long this stay would be.

If you have decided to buy a house or real estate in a city of Canada, you need to know that there is no limitation –or let’s say restriction on the amount of property you are going to buy.

It is a fact that buying property in Canada for non-residents does not lead to Canadian residency or citizenship, and immigration is required.

The important thing is that if you are buying a property just to get a residence in Canada, you should know that starting a business is a faster and easier way to enter this country. But if you want to invest in realچ estate market with no intention of getting a residence, you can only achieve the desired result by buying a property in this country.

But how do Canadians define being a non-resident?

1- If you do not have significant residential ties in Canada and haven’t stayed in this country for more than 183 days in a tax year (you have lived outside the country whole tax year)

2- You are not considered a resident of Canada because you are normally or routinely living in another country

Do you fit the category above? Are you going to buy a property in Toronto (or any other city in Canada) yet?

Well this article is just for you as it helps you take the steps easier by knowing some basics.

As a non-resident, remember this when you come to make your decision about buying a property in Canada, going to a real estate agency is the first step.

It is also possible to provide loans to buyers who do not reside in Canada by calculating a higher interest rate. In this case, lending companies and institutions are responsible for providing part of the cost of the property during the mortgage agreement with the buyer.

Customers who are not resident in this country must pay 35% of the total amount of the property first. One thing to keep in mind is the importance of contacting an accountant or tax advisor. For example, when you buy a property in Canada as a foreign buyer, you pay the same amount of tax that a Canadian citizen pays, but at the time of sale the situation is different, i.e. the Canadian Tax Office enforces certain rules and regulations regarding foreign nationals. For more detailed information in this regard, you should refer to the official website of the Tax Office of Canada.

Buying property and investing standards in Canada

The Canadian real estate market has seen a significant price increase due to high consumer demand and favorable economic factors. But the most important thing, after considering the cost of buying property in Canada, is to assess the security of the investment and the risks of the property market in this country.

When discussing the risk of property confiscation in Canada, global statistics agencies and economic growth charts show that there is good security in Canada, and only the charts will show the number one which is a piece of good news. This number actually indicates that there is more security, so people who want to buy property and invest in Canada can do it safely even when they are doing it relying on government loans.

It is interesting to note that your monthly housing costs, including mortgage payments, should not exceed 30% of your gross income to buy a property in Canada. For example, if your gross income is $ 3,500 per month, you can set your loan installment up to $ 1,050.

Also, based on property valuations in some cities, such as Toronto, you will have to pay 0.75% or 1% of the property value as tax, annually. In Ontario, however, no tax is levied on foreign owners. It is worth mentioning that insurance is another condition of mortgage in this country.

This indicates that in Canada (with an average of 1.92 in control of corruption) judicial corruption as well as rent-seeking activities against justice will be very low and despite such laws will be very rare and special. In the chart below you can also check the corruption control rate (2.5-weak, 2.5 strong)


What qualifies you to buy property in Canada?

When it comes to buying property in Canada, you need to know that the rules are different for citizens of different countries. Any investor who welcomes buying real estate in other countries can also buy real estate in Canada. The only noteworthy point in this section is that from April 21, 2017, people who are not resident in Canada must pay a 15% surcharge tax, which of course applies only in certain areas of Canada.

Property laws for non-Canadians also apply to Canadians who have lived abroad for more than half a year, but are exempt from paying a 15% surcharge.

So people who want to buy a property in Canada, obtain a residence in this country somehow with various investments with much lower costs in different states, and then proceed to buy a property that will be financially more appropriate.

Buying a property in Canada and its legal process

The process of buying property in Canada has some steps that should be taken by experienced lawyers who are fully knowledgeable about financial laws and tax issues. In this section, we will discuss some legal terms and procedures:

1. The real estate agent and the lawyer will assist the seller in preparing the purchase offer. The offer to buy is offered to the seller with a payment in advance of about 10% of the amount of the purchased property.

2. Buyer and seller agree on price.

3. A copy of the agreement will be sent to the lawyer to review the terms and set the right time and date for the contract.

4. There is an opportunity to visit the property until the date of the contract.

5. The lawyer conducts the necessary checks on the seller to make sure that he has no bad record and no property debt, as well.

6. The lawyer prepares a document in which he approves the price mentioned in the contract and also the cost that the buyer has to pay.

7. The lawyer pays all the amounts to the seller and the house documents and keys are given to the buyer after the contract is signed.

It should be noted that to take the steps mentioned above, you can enter Canada with a multi-Canadian visa, or in other words, with a Canadian tourist visa, and then go through all these steps with a better schedule.

House prices in Canada

It is interesting to know that despite the spread of the Coronavirus and the increase in prices, the number of home buyers has decreased by about 25% compared to 2016. In 2020, compared to the previous year, house prices increased by about 14% and reached $ 680,902. The average house growth rate in this city in different months of the year is $ 800 which is considerably high.

Canadian homes have different prices depending on which city and in which area of ​​the city they are located. Toronto is one of Canada’s most popular cities to live in, so here’s a look at the house prices in Toronto, Canada, 2020 in more detail.

The average house and apartment price in Toronto in 2020 is $832,703. The cheapest homes in Toronto cost around $400,000, which are usually far from downtown and some of them may not be completed yet. By 2020, house prices in Toronto have had an ascending flow. The chart below shows the price of a house in Toronto in 2020.



The requirement for Canadian banks to provide mortgages to non-residents is that they must prepay at least 35% of the property price, up to 65% of the home purchase price as a loan to the borrower. Of course, different banks have different conditions. But if you, as a non-resident, want to qualify for a mortgage in Canada, in addition to the initial 35% payment, a letter of recommendation from the bank and a letter of confirmation of income in dollars, a letter of employment with three bills, you need to provide a monthly bank check and also a Canadian credit check.

If you meet the eligibility criteria for getting a loan, the interest on the loan will be calculated for you as a Canadian resident. But if you do not meet these criteria, you can still get a higher interest loan as a mortgage.

To get a loan, you need to go to the bank and after your qualifications are approved, you will have a telephone interview with the bank, then you will send your personal information such as assets, debts, income confirmation, tax returns, etc. by fax or e-mail.

You will need the services of an experienced lawyer who is familiar with Canadian official documents to prepare a mortgage. Keep this in mind when you want to sell a home you bought on credit, you will lose about 1.5 times the installment that you have paid.

But where to find a mortgage?

There are two choices, first to go to the bank, and second to a mortgage broker.

But know that the latter one has an advantage and that is she or he will know the ins and outs of this marketplace and can better find what is best for you.

As a non-resident make sure the broker you choose knows mortgages for buyers who are from outside of the borders.

Home Taxes in Canada 2021

Property owners in Canada have to pay a sum to the municipality as property taxes each year. This amount, which is determined by the city council based on the area in which the property is located, usually includes heavy costs. For example, if the tax on a $ 200,000 property in Toronto is about $ 1,500, the same property in Chatham, Canada, is $ 3,000. Of course, the house you buy in Toronto for $ 200,000 is completely different from the house you buy in Chatham. The municipality is much more insistent on paying taxes than the bank on loans.

How to search for property?

We suggest you to find a realtor as most houses are conducted through two realtor – one for the buyer and one for the seller. The realtor must be registered with the Real Estate Council and also a full-time one. He or she should be credible and be recommended to you by people you trust.

But make sure what type of property you are looking for before you speak to a realtor. Apartment? Townhouse? Other?

The next thing you should find out is that how much you can afford but the mortgage broker you speak to should be Canadian as you will not be able to use for example an Iranian bank to get your mortgage.

Once you are done making up your mind about what exactly you are looking for, go online and search to see what grabs your fancy. 

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