Buying Property In Toronto As A Non Resident

Despite there being a lot of discussion recently about foreign ownership affecting local markets Toronto remains open for business. Buying property in Toronto as a non resident is relatively straight forward. As a long term immigrant myself I have helped a number of clients purchase property in Toronto from abroad. I’ve had to do the same things that my clients have to do. I understand it very well. The GTA is surging in global rankings for lifestyle, education, quality of life and other ranking factors. We live in a truly international context here. Torontonians are internationalists. The city is in high demand.

UPDATE APRIL2017

On April 20th 2017 the Ontario Provincial government introduced a 15% tax on all residential real estate purchases by non residents. It’s called the NRST or “Non Resident Speculation Tax”.
Check this link for the full details.

Who Can Buy Real Estate In Toronto?

Canada is open for business and as such anyone can purchase any kind and any amount of real estate from anywhere. Banks, however, may limit the amount of properties they finance due to risk aversion.

Does Purchasing A Property In Toronto Help My Immigration Chances ?

Immigrating to Canada is a complex process. Unfortunately owning property in the country is not taken into consideration. It doesn’t hurt your chances however and should be a factor in establishing your net worth. Please visit the Government of Canada Citizenship and Immigration website.

I’m A Canadian Citizen Living In A Different Country. Would I Be Considered A Non-Resident?

The rules are very clear. If you are not resident in Canada for more than six months of the year the same rules apply to you as they do to other non-residents.

What If I’m A Non-Resident Who Wants To Buy Property With A Resident?

You will still be considered a non-resident and the same rules will apply.

Financing Questions and Answers for Non-Residents

Can A Non-Resident Get A Mortgage To Purchase A House In Toronto?

As long as you are able to provide a 35% down payment (a Federal requirement) you can apply for financing on the remaining 65%.

How Do I Qualify For Financing As A Non-Resident?

To qualify for financing for a property in Canada, non-residents will generally need a minimum 35% down payment, a letter of reference from their bank, a letter of employment verifying income in Canadian or US dollars, three months of bank statements and a Canadian credit check. This is not a comprehensive list.

What About Interest Rates?

Provided you meet the mortgage eligibility criteria you will be eligible for the same interest rates as Canadians. Certain restrictions apply if you live in a country that does not have a tax treaty with Canada. See a list of countries that have enforceable tax treaties with Canada

Different institutions and lenders offer varying solutions that reflect their exposure to risk. Canadian banks are typically risk averse.

Will Canadian Banks Consider Rental Income As Part Of My Income?

Most lenders will only consider rental income from Canadian properties. Income from properties outside Canada will not be considered as a qualifying factor for a Canadian mortgage.

How Long Do Funds Need To Be Deposited In A Canadian Bank?

30 days is generally the minimum time required for funds to be lodged before the closing of any purchase. However some banks will want to trace the source of your down payment for up to 90 days prior to closing.

How Does The Deposit Work?.

When you make an offer on a property in Toronto you’ll need to provide a deposit. It is commonly around 5% of the purchase price and payable within 24 hours. This is also called the “consideration”. The deposit is held in a secure trust, usually by the listing brokerage and forms part of the down payment. We always recommend opening a Canadian bank account to have the deposit available at hand when you start your search. Typically the deposit comes in the form of a bank draft or certified cheque.

How Do I Find A Mortgage Broker Who Can Help Non-Residents Buy Property In Toronto?

We are a full service team. If you work with Pat Simmonds Real Estate Services to buy your home our team of lenders, home inspectors, lawyers and insurance agents would be happy to assist you in the decision process.

What Kinds Of Closing Costs Should I Expect To Pay?

You will pay the same closing costs as Canadian residents – land transfer taxes and legal fees. See Related: Closing Costs

Will I Qualify For Any Government Programs?

As a non-resident, you will not qualify for the first-time buyer programs or land tax rebates offered by the Canadian government.

I Don’t Need A Mortgage. How Do I Pay For The Property?

You can buy a property without getting a mortgage if you have 100% of the funds in cash. That money would need to be transferred to your lawyer before closing on the property.

Home Buying Process Questions

Do I Need To Come To Canada To Search For A Property?

We’ve helped many non-resident Buyers buy property while they were overseas. We use video, live walk throughs via Skype or FaceTime and interactive online tours – it’s almost as good as seeing the home in person! Many of our non-residents also choose to have a family member of friend living in Canada assist with the home search process. If you are going to need a mortgage, you’ll need to have a Canadian bank account – Canadian banks will require you to come to Canada to open a bank account. Note there are some exceptions to this (for example, we’ve had clients with HSBC accounts able to get a mortgage without coming to Canada).

I Want To Buy A House. Can You Recommend A Home Inspector?

When you work with Pat Simmonds Real Estate Services, you get access to all our partners – home inspectors, handymen, painters, contractors, plumbers, electricians, etc.

If I Buy An Investment Property, Can You Find Tenants For It And Manage It For Me?

We’ve helped many landlords find tenants for their properties. Service fees do apply. Read about our services here.

Legal Questions For Non-Resident Buyers

Do I Have To Be In Canada To Buy A Property?

You can buy a property from anywhere in the world (it’s amazing what we can do with video and Skype), but note that you will be required to come to Canada to open a bank account (and yes, you’ll need a Canadian bank account if you are getting a Canadian mortgage). To take ownership of the property (we call that ‘closing’), you can do that with a notary public in the country you are in – your Canadian lawyer can take you through exactly what is required.

Where Do I Find A Lawyer Who Can Help Me With The Purchase as a Non-Resident?

We work with some excellent lawyers who are familiar with the intricacies of working with non-residents. We’d be happy to recommend them.

How Do I Sign The Offer Paperwork?

Paperwork can be signed either the old way: scan and email; or the new way: electronic signatures with either a tablet or smartphone. Both are legal.

Insurance Questions For Non-Residents

Is Insurance An Issue For Non-Residents?

Insurance is more complicated but not impossible. Depending on your financial institution of choice you can go either in-house or via a broker.

What Is The Typical Premium?

Like all insurance it depends on what, where and how much.

Money Questions

What Are The Taxes Associated With Property In Toronto?

Everyone in Toronto pays Land Transfer Tax (Provincial and Municipal), Property Taxes (waste collection and services) and Income Tax.
Land Transfer Tax is only payed when purchasing a property. Property tax is payed annually as is Income Tax. You can get an estimate on the City of Toronto Property Tax Calculator.

When real estate is sold Capital Gains is applied to all non primary residence properties. All net profit gain in value over time is considered taxable by the federal government. The Canada Revenue Agency will require a Certificate of Compliance upon closure before funds are allowed to leave the country to ensure all taxes have been paid. The formulas used to calculate gain and offset are complicated. It is always best to consult with an accountant. Buying property in Toronto as a non resident entails certain responsibilities and obligations beyond that expected of resident citizens.

Can you explain closing costs?

There are a variety of costs associated with closing a transaction when buying a property in Toronto.

Before Closing

• Deposit (usually 5% of the purchase price in Toronto, paid within 24 hours of your offer being accepted)
• Property Appraisal ($300- $500, often paid by the lender)
• Home Inspection ($400-$600, paid to the home inspection company at the time of the inspection)

On Closing

• Balance of the Purchase Price – the purchase price less your initial deposit. Usually, the bulk will come from your lender and become your mortgage.
• Legal Fees – amount varies depending on purchase price and lawyer (approximately $1,800 for a $500,000 purchase).
• Title Insurance – sometimes included in your legal fees ($250-$400).
• Mortgage Broker Commission – if applicable, usually paid by the lender.
• Property Survey – if required ($1,000-$2,000).
• Ontario Land Transfer Tax – varies depending on purchase price (see our Land Transfer Calculator).
• Toronto Land Transfer Tax (varies depending on purchase price (see our Land Transfer Calculator).
• Property Tax Adjustment – reimbursement to Seller of property taxes they paid beyond the closing date.
• HST – generally only applicable on new construction condos and houses.
• Tarion Warranty Fees – warranty on new construction condos and houses only, not resale, (click here to estimate Tarion Fees).
• Provincial Sales Tax – only applicable on chattels purchased from vendor (amount varies).
• Adjustments for Utilities/Condo Fees/etc. – reimbursement to Seller for prepaid utilities, etc. (amount varies).

Please see our post about Closing Costs For Buyers In Toronto.

Selling Questions

When selling the Property, what kinds of taxes will I have to pay

We always recommend talking to an accountant to get up to the minute professional advice. Generally though any income and gains in value of the property will be taxed. As we mentioned earlier the Canadian Government generally withholds 25% of the gross selling price until the appropriate tax forms have been completed or a “Certificate of Compliance” can be provided as proof that the appropriate taxes have been paid.

We hope you fond this post about buying property in Toronto as a non resident useful. Do you have other questions? We’d be happy to help answer them and lead you on the path to home ownership in Toronto.
If you’d like to find out about the luxury market in Toronto read this link: