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Can a Foreign Investor Buy Property in Canada?

July 15, 2022

Real Estate in Canada

Why Choose Canada for Your Real Estate Investments?

Over the last decade, and especially since the onset of the Covid Pandemic, Canada’s stable economy and mature real estate market have made investments incredibly attractive to domestic and foreign investors. Canada has a cosmopolitan real estate industry with clear property titles, trustworthy legislation, and strict ethical and professional standards. Moreover, Canada welcomes buyers from all over the world, and there are no restrictions on the amount or type of property they can purchase.

Regulations on Real Estate Investments by Foreign Investors

In the Canadian Real Estate Market, a non-resident does not earn a Canadian income and does not file taxes in Canada. If you are a non-resident investor and are interested in buying property in Canada, having a trusted real estate brokerage such as Save Max, which has expertise in dealing with foreign investors, can make the entire process easier. We have compiled a short video as a ready reckoner, giving you a brief overview of how Save Max can help you invest in Canadian Real Estate. You can watch the video below.

Most Canadian provinces and territories do not prohibit or restrict property purchases by non-residents. British Columbia and Ontario have a 15% land-transfer tax for foreign buyers in a few regions and an additional speculation levy on empty homes. The Non-Resident Speculation Tax (NRST) is a 15 % tax on the purchase of residential property in the Greater Golden Horseshoe Region (GGH) by Foreign Investors or Non-Permanent Canadian Residents.

This tax does not apply to commercial property, agricultural or industrial land. If you become a Permanent Resident within four years from the date of purchase of the property, the tax amount is credited to your account. Likewise, other rebates and exemptions can apply to you, and your local Brokerage can help you choose the best options.

In addition to these taxes, foreign investors can expect a higher down payment of 35% of the property’s value. To know more about the diverse options and opportunities available, fill in the contact form below, and one of our expert realtors will contact you.

What Do Non-residents Need to Qualify for a Mortgage in Canada

If Non-resident Investors can prove that they can meet the mortgage eligibility, they have access to the same mortgage products available to Canadian residents. Lenders will ask for at least 35 percent of the purchase price and will not allow applicants to include rental income to qualify for the mortgage. Also, the down payment cannot be a gift from another person or entity.

Usually, foreign investors will need to be in Canada at least twice to complete the process of financing and buying property. The buyer must visit Canada to open a Canadian bank account (there may be exceptions to this rule). Second, they must be present at closing, as there are no options for using the power of attorney.

Foreign Investors will need the following documents to qualify for a mortgage successfully.

  • Proof of income (Income Tax Returns, payslips)
  • Proof of availability of funds for a down payment (bank statements for the last six months)
  • Reference letter from a bank outside Canada
  • Report from an international credit bureau (if available in your country) or bank statements for the last six months

Advantages of Investing in Real Estate in Canada

Some of the many valid reasons for becoming an investor in Canadian real estate are listed below.

  • Mortgage available with 35% down payment –If an investor can meet the mortgage eligibility criteria, they can access the same mortgage products as Canadian residents. Also, if you invest in a pre-construction property, the down payment is payable in installments over several years.
  • Very Low Rates of Interest – With one of the lowest annual interest rates, hovering between 1.5% and 2%, foreign investors can save thousands of dollars when investing in Canadian real estate.
  • High Returns on Investment – Along with rental incomes, investors in real estate see higher returns, with a faster increase in the property’s value.
  • Steady Real Estate Market – Canada’s real estate has been on a steady uptrend for over 20 years, with a favourable economic market.

Summing Up

The answer to whether a foreign investor can invest in real estate in Canada is YES! If you would like to benefit from this profitable investment option, you should first hire an experienced real estate agent in Canada. Our realtors at our Brokerage can consult with you on Canadian tax laws and how they apply to real estate investments. A good brokerage will help you find the right property, explore mortgage financing options, and make an appropriate offer.

At Save Max, our team will help you find the right property at the right prices, mortgage and appropriate rental income. If you decide to sell the property, we can get you the best deal with maximum returns on investment. You can mail us at [email protected], and we shall contact you immediately.

Before looking at investment options, assess your current financial situation. Like any other investment, you should thoroughly research the market offerings before making decisions. Browse through the MLS Listings at Save Max and look for homes for sale in Toronto and houses for sale in Calgary to get a sense of what is available. Be clear about your goals and risk tolerance before diving into investments.