Foreign Investors are an integral part of the condo market in the Greater Toronto Area. Worldwide, the GTA is considered a very safe and profitable place to invest capital.
Canada is a market with a stable government, low Canadian dollar, below-average unemployment, and have a thriving regional economy of diverse industries. The GTA is the economic engine of Canada and is enjoying a period of growing productivity, immigration, and new technologies that are fueling the Canadian economy and bringing prosperity to our growing population.
This article will touch upon important areas that any foreign investor will want to know about investing in real estate in the GTA. Whether you are looking to buy a home while you study in Canada, purchase a vacation home, or want to invest in real estate, foreign ownership is welcomed and rewarded in the Greater Toronto Area.
Investors worldwide consider the Greater Toronto Area as a safe and profitable location to purchase real estate. Investors from countries like China, India, America, Russia, and the UAE make up roughly 10% of all new condo sales. These investors typically prefer to buy pre-construction condos.
In Canada, foreign Investors are afforded the same right to buying real estate and given the same protections under the law as a Canadian citizen. In fact, there are no restrictions regarding how much or what types of real estate purchases a foreign investor can make. Naturally, there will be unique tax implications and considerations for each foreign investor.
Because Real Estate Law is regulated provincially, this article deals specifically with the issues relating to the Province of Ontario and specifically to the Greater Toronto Area, which is also known as the Golden Triangle. The following items discussed are for your education. If you have any questions, please get in touch with ATeam Condos. We would be happy to help you with your investment questions about GTA preconstruction condos.
What is the Foreign Buyers Tax (NRST)?
The Non‑Resident Speculation Tax (NRST) is a 20% tax on all residential acquisitions by foreign investors in the Greater Golden Horseshoe Region (GGH). This tax does not apply to Permanent Residents or people with Work Visa/Student Visas. There are exceptions and rebates that are offered to those that qualify. Consult with a professional for the latest and most accurate information.
Can I buy property in my child’s name?
You are allowed to purchase real estate in your child’s name if they are at least 18 years old. You are entitled to buy property in joint names as well. If your child is a permanent resident of Canada, you may qualify for first-time buyer rebates.
Can a corporation buy a property?
You can purchase real estate through a Corporation. A non-resident corporation must file corporate income tax with Revenue Canada. Of course, you should consult with proper tax and legal authorities for precise details.
Pre-Construction Condos are an excellent investment for Foreign Investors.
While the GTA is ripe with investment potential, foreign buyers’ most popular real estate investment is pre-construction condo units. This type of investment offers a very big bang for the buck. With a small down payment, you can secure a valuable real estate asset that can appreciate for a few years until construction is completed.
Then, without needing to see the unit, the condo can be made to provide an income stream while paying for itself as a rental property. These types of units can provide a good Return On Investment and long-term growth potential.
Toronto Residential Property Taxes
Residential Property Tax is an annual tax based upon the assessed value of a property. In the GTA, we pay approximately .075% – 1% of the government-assessed value of the property.
Can Non-Residents own investment property in Canada for the purpose of collecting rent?
Yes, a Non-Resident can buy property in Canada to create a rental income. Non-residents who collect rent in Canada are subject to having 25% of their gross rents withheld for taxes, and your tax obligation will end here. If a foreign investor chooses to file a yearly tax return on the rental income, they will benefit from lowering the taxable income with the use of deductions.
Since Rental Income is taxed under Canadian Law, you can file an NR6 Statement to claim income as a foreign owner. With your taxes, you can write off various expenses like; condo fees, the interest portion of the mortgage, property taxes, property management fees, real estate fees, repairs etc. ATeam Condos can help you by connecting you with some of our most used and trusted professional help.
Can Foreign Investors get a Mortgage?
Yes, financing is available for foreign buyers in Ontario. As a non-resident of Canada, you can be asked to pay as much as 35% of the purchase price as a down payment. The rest of the purchase price can be borrowed from a financial institution against the property’s value. Many lenders will compete for your business.
The interest rates available to non-residents are typically the same as any other resident. For more information on Canadian mortgages, we can help set you up with a mortgage broker familiar with financing for Foreign Buyers. It is always prudent to do your homework first and be ready to purchase when the best opportunity presents itself.
How Much Does It Cost to Buy Property In Canada?
Any Buyer of GTA real estate should budget between 4-5 % of the purchase price to cover the transactional costs of acquiring real estate. Charges like legal costs, Land Transfer Tax, Development Charges, Utilities hook-up charges, and Tarion Warranty are some of the expenses that make up the purchase’s closing costs.
For some, the Non-Resident Speculation Tax (NRST) will apply to speculators. In Canada, the seller of real estate is responsible for paying all realtor commissions. When you acquire a professional real estate salesperson, it will cost you nothing.
Before Placing an Offer. Be Prepared.
It is in your best interest to be ready to purchase when a great opportunity presents itself. Having funds transferred into a Canadian Bank is an excellent first step. Depending on the originating country, it could take a number of weeks for your money to clear in Canada. The current real estate market has listed properties selling within days, be ready by having your finances accessible beforehand.
Purchasing While Outside the Country
It has never been easier to complete a real estate transaction from afar. Today, it is easy to see pictures, videos, floor plans, and obtain measurements from the comfort of your home computer. Using Skype, Facetime, and WhatsApp, you can virtually visit with any professionals needed to make a sound decision.
Today, the use of electronic signatures to create binding documents is an acceptable procedure. Power of Attorneys are also accepted when conducting real estate transactions from distant countries. As with all important contracts, we highly recommend hiring a legal professional to help you with your real estate transaction.
What are the steps to Buying an Investment Property?
Simply put, here are the three most important steps to purchasing real estate if you are a non-resident and already know what you wish to buy:
- Prepare for a mortgage pre-approval
- Transfer of Funds into a Canadian Bank
- Meet With Real Estate Lawyer, Tax Experts
The mortgage approval process can be done in advance, even before you start shopping for an investment property. ATeam Condos has a long history of helping people find the right property to make a good investment. We can help if you are planning to purchase an investment property in the GTA
The GTA is considered one of the best locations in all of Canada to make a real estate investment. Although the process may seem daunting for a foreign investor, it is not too difficult and easily done.
ATeam Condos is here to help you find out about the opportunities, market conditions, landlord/tenant laws, locations, incentives, and promotions available in this hot market.
We can connect you with legal representatives, accountants, and people in the banking industry to make your investment an easier experience.
The GTA is known as the Golden Horseshoe. It is a vital region located around the western profile of Lake Ontario. In this market, we see decades of expansion and growth to come. Even with the Foreign Buyer’s tax and the higher deposit structures asked of Foreign Investors, this is an excellent location for investment.
We believe that an informed client makes for a more confident investor. It is important that you have an investment strategy and financing in place. Start early and be ready.