Canadian law allows foreigners to buy, possess and sell real estate in Canada.
The residential real estate market in Canada is one of the most attractive in the world. In the past 2 years residential housing market is rapidly growing by an average of 15-20% per year. Many experts prove that along with Austria, Canada is one of the few highly developed countries with significantly undervalued real estate property.
Canadian real estate market is constantly growing also due to large influx of immigrants (almost 300 thousand people per year).
Toronto, the largest Canadian city along with Vancouver and Montreal are considered the most attractive for residential real estate investment.
Foreign ownership of Canadian property. Q & A
Q. – Can a foreigner without status of a resident of Canada get the credit in Canadian bank to purchase real estate?
A. – Yes, it is possible. If you are not a resident of Canada, or have just arrived in Canada in this case your down payment should be at least 25-30%. The rest of the amount the bank provides mortgage loan. In 2015 average mortgage rate was less than 2.5% per annum. The term of the mortgage is typically 30 – 35 years.
All other costs associated with the maintenance of real estate (property tax, payment for utility services, etc.) are the same for all categories of homeowners, regardless of the status in Canada.
Q. – What is the tax on the sale of property?
A. – When selling a property in Canada, the sale price is usually higher than the price at which the property was purchased. This difference is recognized as income from capital (gain capital). As for any other income, capital gains foreigner will need to pay tax in Canada.
Tax gain capital shall be paid in the case:
1. If the owner is not a resident of Canada;
2. If the owner is a resident of Canada, but to sell the property was not his main place of residence in Canada.
This tax is not payable in the event that the owner is a resident of Canada and the property was his primary residence in Canada.
Q. – Is it possible to buy property for acquiring the status of a resident of Canada?
A. – The acquisition of real estate in Canada does not give advantage in obtaining permanent resident status. To obtain the status of permanent resident, you should immigrate to Canada under one of the immigration categories. However, Canadian-owned real estate can be considered as an asset for the performance of the financial requirements for the immigration on Investors and Entrepreneurs Immigration Program.
Q.- Is it possible to buy and sell property not being physically present in Canada?
A. – Yes, it is possible.
Now many foreigners are actively buying real estate in Canada, as it is considered as a good investment. These deals can be done without the personal presence of the buyer in Canada. The deal can be closed either on the Power of Attorney issued to the agent or by sending signed papers by fax or courier mail.
Q. – What is the best place to buy property in Canada?
A. – To answer this question, you should decide on your plans – decide how much you are going to invest, for how long, for what purposes, how do you plan to use to buy real estate. In addition, much depends on whether you are present in Canada, whether you have status in Canada, and, if not, whether its plan to receive. Each case must be considered individually.
Q. – What you need to have the capital to purchase real estate in Canada? What is the return on investment?
A. – Purchasing the residential property in new condominium buildings is the most attractive investment nowadays. The average cost of condo apartments is about 300 000 Canadian dollars. Apartments are fully-equipped – a modern kitchen with a refrigerator and dishwasher, plumbing, flooring or carpeting, as well as lighting. If you are planning to buy an apartment on mortgage credit, the down payment will be 30% of the amount. So the amount of $ 100 000 will be enough.
Condo apartment can be rented. Normally the rent fee covers the cost of monthly mortgage payments, maintenance fee and property tax. Eventually the investor normally secures 200-300 dollars a month of positive cash flow.
If the investor sells this property in five years, the sales price would be about 400 000 dollars. 12% of the mortgage ($24 000) will be paid by that time by rent tenants.
Finally, with $100 000 investments the expected return on such investments is $124 000 in 5 years or 25% per annum on the invested capital.