Effective as of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”) prevents non-Canadians from buying residential property in Canada for 2 years.
Before that, a foreigner, including US Citizen and international student, is allowed to buy property in Toronto. The process is quite similar to that of the permanent resident, except for the main variances in the applicable tax, and the financial mortgage requirement.
House buyers may consider the following factors, which are attempted to list in sequence as the main steps when you buy a property in Ontario.
Non residents may have to prepare a higher down payment of 35% of the purchase price vs the much lower one for the resident. The mortgages may be charged higher due to your lack of credit history in Canada.
Bank reference letter, Employment verification letter (including income verification), Bank statements (three months as a minimum), and Credit check.
The real pain is that Canadian banks request you in person to open an account if you happen to have difficulties coming over. However, you may try to reach your local branch of those banks to check whether they would offer such a convenience after your mortgage approval. For example, HSBC may offer such a convenience.
Non-Resident Speculation Tax (NRST) is applicable to foreigners when you buy residential properties in the Greater Golden Horseshoe Region, Toronto included. Please review the details on NRST rebate and exemptions
When you plan to rent out your property, income tax is applicable. If you don’t file to CRA, the tenant would withhold 25% of the rental income to CRA. Please refer to the CRA website for details.
You could reach various aggregator websites to look for your properties. Realsav.com also covers those listings with the sold data for your reference.
If you couldn’t be on-site, you could ask for help from your family member or a friend. If no such help is available, thanks to the new technology, many listings are listed with picture details and 3D Tour, we could also show you the property via video or virtual viewing through online apps.
All the offers and related signing would be done electronically.
5% of the purchase price is required as a deposit. It needs to be ready, normally within 24 hours after the acceptance of the offer via a banker draft, or money wire transfer.
If you have a home inspection condition in your offer, you could hire a home inspector directly or through us. The associated fee is $300~500 for an average home.
Insurance is required on the closing day. There are a number of choices available.
You may need a notary public locally for the title change if you couldn’t attend in person. Your lawyer will walk through you the details.
We could help you list your home in MLS and find the right tenant. The commission is commonly 1 month rent with half to the listing brokerage and half to the brokerage that brings in the tenant.
If you need someone for your home maintenance, we charge a fee equivalent to 5% of the monthly rent. The charge for repairs, changes, and related costs is billed to you separately.
For your rental income, you probably would file to CRA for net income tax. Otherwise, the tenant may withhold 25% of your rent to CRA.