Buying a home is a major life decision for many people. That's why you should understand everything that comes with the package. Do I need to pay the 15%/20% "Additional Property Transfer Tax"?  Who do I need to complete a deal?

Who would need to pay the recently introduced "additional property transfer tax" when buying real estate in Canada?​

For many people around the world, Canada, especially Vancouver and Toronto, is considered very attractive and popular cities to live. For these two cities, when buying real properties, you need to pay the province’s property transfer tax range from 1% to 3% in B.C. and from 1.5% to 2.5% in Ontario.

In addition to the usual property transfer tax, due to the recent price boom in these two cities, both provinces have introduced an “additional property transfer tax" for foreign national (anyone who is not a Canadian citizen or permanent resident). In other words, as long as the buyer is a Canadian citizen (i.e. he or she can either be a resident or a non-resident) or a permanent resident in Canada, this additional property tax is not required.

For Ontario, it is 15% ; and for B.C. the rate has been increased from 15% to 20%  effective February 21, 2018.

What do you need to deal with when buying from aboard?

Obviously, the very first thing you need to consider would be options available and your personal preferences (e.g. single house, condo or townhouse and etc ...), so that you can stay focus on what you want to buy, and where. In the whole process, you would need:​

  • A real estate agent - A good and trustworthy real estate agent who not only helps you find the right place but also saves you money and time.

  • A lawyer - A real estate lawyer who will handle the legal property transfer process.

  • A mortgage broker - The advantage of using a local broker is two-fold: you can meet with the mortgage agent or broker in-person and discuss your needs, and the agent or broker will compare for you the best mortgage rates offered by banks and lenders across Canada.​

Do I pay tax based on “gross” rental income or “net” rental income?

If you are a non-resident receiving rental income, by default, your obligation is to have withheld at rate of 25% of the gross rental amount. However, you can elect to file a Canadian tax return under section 216 together with submitting a form, called NR6. By doing so, you elect to have tax withheld based on the net rental income, which often makes a huge difference in terms of your final tax liability.

Please more information, click Non-residents receiving rental income.

For non-residents owning rental properties in Canada, what are the usual things you need to deal with?

  • Insurance policy.

  • Maintenance and service guys (e.g. leakage, venting problem, renovation before/after renting out your properties).

  • A property manager who will manage your tenants (if you plan to rent out your property).

  • For rental properties, you would need someone like a CPA who can manage all your filings with the CRA such as Form NR6, NR4 and income tax return for non-residents.

Others

  • Applying for utilities

  • Paying property taxes

  • Setting up pre-authorized payment plans (i.e. bank's direct debit arrangement)

  • Moving and storage