Can work permit holders buy a house in Canada?

In Canada, real estate is regulated provincially. If you are a foreigner looking to buy property in Ontario, citizenship status is not a hindrance. Student visa holders, work permit holders, permanent residents, and even non-residents can own property. You can buy any property anywhere in the province. Foreigners have the right to buy everything from condos to luxury homes, detached homes to vineyards, and from commercial properties to equestrian farms, and a lot more. The only difference between a Canadian citizen and a foreigner buying property is that a foreigner has to pay foreign buyer tax in Ontario.

What is the Foreign Buyers’ Tax?

Ontario and the Greater Horseshoe region have a Non-Resident Speculation Tax (NRST) for foreign buyers. The tax is 15% of the purchase price. However, it is important to note that immigrants, students with student visas, and those with work visas are exempt from the tax.

Does owning property in Canada impact on your immigration status?

You will not get any special immigration privileges just because you own property in Canada. All immigrants who want Canadian resident visas have to meet the minimum qualification and have to go through the provincial nominee program. The Ontario Provincial Nominee Program has these immigration categories/streams:

  • Employer Job Offer: In-Demand Skills
  • Human Capital Priorities (which is aligned with Express Entry)
  • Express Entry Skilled Trades and French Worker
  • French-Speaking Skilled Worker (which is aligned with Express Entry)
  • International Students

Other than the provincial programs, there are also federal immigration programs like The Federal Skilled Worker Program (FSWP) which offers permanent residence status to skilled professionals who can contribute to the country’s economy. You can get all immigration-related information from the Canadian Government’s Immigration and Citizenship Website.

How long can immigrants stay in Canada?

Those who do not hold student visas, work visas, or are permanent residents can only stay in Canada for less than 6 months at a time. However, note the common practice of leaving Canada just before the 6 months are over and then coming back (to beat the system) can get you barred from entering the country.

What other taxes are applicable?

Other than the Non-Resident Speculation Tax (NRST), foreigners also have to pay the other taxes payable by Ontario property owners. In the Greater Toronto Area, these are the annual property taxes. These taxes are pegged on the assessed value of the property and are between 0.75% and 1% of the assessed value.

Both foreigners and Canadian residents also pay the Land Transfer Tax (LTT). First-time home buyers may qualify for a rebate of the LTT, provided you intend to use the property as your primary residence and not to generate income.

Should you sell the property, there is a 25% non-resident withholding tax payable. This is calculated as a percentage of the property’s sale price.

Can Non-Residents Collect Rent in Canada?

If you have bought real estate with the aim of collecting rent, there’s a 25% withhold tax on the gross rent received for non-residents. You have the option of filing taxes with the CRA to have your expenses subtracted from this amount, but otherwise, your tax obligations end here. You should fill the NR6 with the CRA to claim income on your rental property.

Can foreign buyers get financing in Ontario?

Financing is available to foreign buyers, just like with citizens and permanent residents. However, this financing is in lieu of a Canadian income. You also expect to pay a larger down payment. This is usually in the region of 35% of the value of the property. Interest rates are usually similar to those offered to Canadian residents, which are currently very low. In addition to the down payment, you may also be required to show:

  • A reference letter from your bank
  • Employment/income verification letter
  • Bank statements (going back at least three months)
  • Credit check

Where can one search for Toronto real estate?

MLS (Multiple Listing System) is a pool of listings by mortgage brokers and agents in Ontario. This shared database is a good source of information on what is available in the Ontario real estate market. Enlisting the services of an approved mortgage broker allows you not only to get the best property but also to get the best mortgages, including private mortgages.

What process does a foreigner follow to buy a property in Ontario?

You first need to deposit money to a Canadian bank account before you make an offer. It will take up to 2 weeks for the money to reflect in your Canadian bank account, depending on the country of origin. You should have the money in your account before making an offer because the average listing sells in less than 2 weeks.

You don’t have to be in Canada to make the purchase. You can view all the home details in videos and pictures, including measurements and floor plans. Skype, FaceTime, WhatsApp, and other tools allow you to take virtual walks of the property.

Once you have picked a property you are interested in, you can sign the relevant paperwork using tools like DocuSign Electronic Signatures. You can also get your mortgage without visiting Canada. An approved mortgage broker will help you hunt for the best deal. You will need to either be in the country or give power of attorney to someone who is in the country to sign the mortgage documents. You can give the power of attorney from overseas, but you need to courier the original documents to a reputable Toronto law firm. Not having to make trips to and from Canada in the home buying process saves you time and money.

What happens once the offer is accepted?

If you make a successful offer, you can use a non-negotiable cheque payable within 24 hours of the offer acceptance. You can also do a wire transfer (especially if you are outside Canada) to the insured trust account of the listing brokerage.

You should get insurance against fire, theft, and other unforeseen events during the closing process. This is actually a condition for most mortgage lenders. Another condition for mortgage lenders is home inspections. This is done by a licensed home inspector. It helps ascertain the actual value of the property.

Note that the seller is responsible for paying both the buyers’ and sellers’ realtor commissions. So, enlisting us to help you in the purchase process not only offers convenience, but it will likely cost you nothing.

Do foreigners need a lawyer to buy property in Canada?

In Canada, it is a legal requirement for lawyers to sign the transfer of real estate between the buyer and the seller. There is also specialized software that pulls info for the transfer and other details of the property transaction. Only lawyers can access this software. You can engage your lawyer only in the closing process or throughout the process.

Why is Ontario real estate popular with foreign buyers?

Ontario, particularly Toronto, is a popular destination for US citizens and other foreigners. Common reasons for the impressive update of real estate by foreigners in Ontario are:

  • Ontario shares a 2,700-kilometer border with the U.S. (Michigan, New York, Ohio, Pennsylvania, and Minnesota). The proximity and the similarity in climate with these Northern U.S. states makes it a natural choice for immigrants.
  • The Toronto real estate market has recently been characterized by strong price appreciation and low-interest rates. The strong regional economy, below-average unemployment rate, and a low Canadian dollar make Toronto real estate the ideal investment vehicle.
  • Although Ontario has a reputation for having a high cost of living, salaries are high and the minimum wage at $14 is among the highest in Canada.
  • Ontario is known for its quality public services and cleanliness, making it an attractive foreigner destination.
  • Toronto is the economic hub of Canada. The most populous city in the country has a diverse economy consisting of mining (metals and minerals), hydroelectric energy production, automobile, electrical parts, machinery, and fruit and small grains farming in Southern Ontario.
  • Ontario has the most diverse culture in the country, with foreign-born people in the province comprising over 28% of the population (compared to the national average of below 20%). This diversity, and the fact that the city is the social hub of Canada, makes it attractive to foreigners.
  • The province offers quality government-funded education to residents from Kindergarten to secondary school. The province is home to University of Toronto, ranked the 18th best university in the world, and other top universities like Queen’s University and the University of Ottawa.
  • Other than the well-known Niagara Falls, Ontario is also home to other attractions like the Lakeside Park Carousel. The province is very scenic and there are many outdoor recreation opportunities like hiking, fishing, skiing, and hunting.