The rules and regulations for foreign buyers in Canadian real estate are not exactly clear-cut. It takes sitting down with a professional advisor to understand the ins and outs of buying and selling property in Canada. Otherwise, you could face legal ramifications or miss out on better opportunities. If you’re just starting to explore your options as a foreign investor, start here by reading these 5 facts to better understand foreign investment practices in Canada.
In Canada, there is no residency or citizenship requirement for buying and owning real estate. Even if you only occupy a temporary residence, you can still purchase property here. However, you must follow the rules and comply with all of the appropriate immigration requirements. If you’d like to buy a property strictly for investment reasons, non-residents can also hold rental properties as long as they file annual tax returns with the Canadian Revenue Agency.
Regulations in Canada often differ from city to city, so it’s essential to perform your due diligence to ensure you choose the right city based on your investment goals. For instance, taxes vary from province to province which can greatly impact your decision. An example of this can be seen in Vancouver having a foreign buyer’s tax of 15%, whereas Toronto has no such tax. However, that shouldn’t be your only consideration. You should also look at annual property tax rates and whether the market is growing or contracting to ensure you’re getting a high ROI.
The good news is if you plan to invest in the Canadian real estate market, there are several legal structures available. These include a general partnership, limited partnership, co-ownership, corporation, trust, personal ownership or a combination of the above. This gives you a lot of options compared to other countries that might only allow you to form a joint venture with a national investor.
Foreign investors can also get access to loans from a Canadian bank, and in some instances be able to use loans from foreign banks as well. With our ultra-low interest rates, this can save foreign investors hundreds of thousands of dollars when investing in real estate here compared to their home country.
Another benefit of foreign property ownership is the many tax deductions that become available when investing in Canada. For example, any interest you pay on money borrowed to invest in real estate is tax-deductible if the property is used to generate income. Countries with tax agreements with Canada, such as the USA, can also avoid double tax burdens. If you understand the Canadian tax laws and how they apply to real estate investment, owning can be quite profitable.
If you’re considering investing in Canadian property, it’s important to talk to an expert who understands everything about foreign investment in Canada. At Medallion Group Capital, our team can help answer your questions and assist you with your real estate transaction. We can also take care of the non-resident taxes applied to rental properties. We are a one-stop-shop for all your real estate and mortgage needs. Contact us today to learn more about our services and begin your investment journey.