Canadians have been complaining that wealthy real estate buyers from Asia have driven up the price of housing in the country, but exactly how much is foreign-owned is difficult to say. There are reports of students buying million dollar properties in Toronto and Montreal and not surprisingly, this supposed encroachment of foreign investors into the Canadian real estate market has raised some questions.
As mentioned, it’s hard to determine how prevalent foreign ownership of Canadian real estate is. Neither the industry nor the government keep official data on the subject and some buyers are actually using local representation. Buying a condo in Montreal or anywhere in Canada has few restrictions for foreign buyers and any restrictions that exist are at the provincial level and largely pertain to farm lands.
Who Can Buy Property?
Buyers who intend to spend less than 6 months in the country can still keep property here without applying for residency. For those who want to live in the property longer, they will need to apply for permanent residency.
Those who want to rent out the property are not required to live in the property. They do, however, need to pay a 25% withholding tax on the income they receive from the rental.
Fees, Down payments and Mortgage
When purchasing real estate in Canada, foreigners are also subject to the same taxes and fees as any Canadian but they may have to pay higher land or property transfer taxes in some areas. Some are also required to pay a different capital gains tax should they sell the property in the future.
If the buyer takes out a mortgage on the property, they will need to obtain it from a Canadian bank. They will also be required to put up a higher down payment than Canadian residents. While permanent residents only need to put out 5-10% of the purchase price, foreign buyers are required around 35% as down payment.
Agricultural Land Purchase
Internationally, the global land buying market is more focused on farmlands. Many investors from Saudi Arabia, India and China are quietly buying up agricultural lands in various parts of the globe. In Canada, however, several provinces limit the amount of agricultural lands that a foreigner can buy. In Alberta, non-residents are only allowed to purchase two plots of agricultural land not exceeding 20 acres in total. Manitoba restricts non-residents from owning more than 40 acres of farmland and buyers are required to move to the province within 24 months of the purchase date. Meanwhile Quebec does not allow the purchase of farmland for non-residents at all.
Right now, many foreign real estate buyers are also eyeing condominium developments in major cities in Canada. Although this has driven up prices of housing, prices are only going to go up in the next 10 years. For anyone who is thinking of investing in real estate in Montreal, Toronto or Vancouver, now is definitely a good time to do so.