Foreign ownership is a common practice in Vancouver and the lower mainland, but there are many factors that need to be considered when looking at real estate purchases in another country. If you are looking to invest in a Vancouver property from abroad then check out our quick guide below.
The number one consideration for property ownership in Canada is based around “time spent in the country.” Whether you are a foreigner or a citizen of Canada, if you don’t reside in Canada for more than half of the year you are considered non-residents (and thus subject to different ownership rules).
Canada welcomes home buyers from all countries, and there are no restrictions on the amount or kind of real estate you can buy.
Owning a property in Canada does not give you any immigration privileges and if you want to live here, you’ll still need to qualify under Canada’s Immigration regulations.
Canadian lenders will typically be willing and able to finance the home purchases of non-residents, but at the cost of a significantly larger down payment (approx. 35% vs the 5%-10% that residents typically pay). Lenders will require you to verify your income and prove that you can pay the mortgage. Though still feasible, mortgage interest rates may be higher than what Canadian residents would pay as well.
Know your taxes
As part of your due diligence prior to investing in any foreign property, make sure that you contact your accountant or financial adviser to touch base on how a purchase like this would affect your rate of taxation. The below is intended to be a simple outline of some factors you should consider.
Non-Canadian citizens and non-permanent residents of Canada buying a property in the Greater Vancouver Regional District (GVRD) area must pay a 20% foreign buyer’s tax (as of Feb 21, 2018).
When buying a property in Metro Vancouver, foreign buyers pay the same land transfer taxes as Canadian residents. First time home buyers who plan to use the purchase as their primary residence may be eligible for land transfer tax rebates.
You must always comply with Canada Revenue Agency’s rules regarding the tax implications when selling your investment property. You can be penalized heavily if your sale is not in compliance with all forms and procedures. Full details of the tax implications for non-residents selling property can be found on the CRA website, though you should always seek professional financial counsel regarding such matters.3
It’s sometimes difficult (and more expensive) for non-residents to obtain insurance for an investment property. Given that proof of home insurance is required to obtain a mortgage, this is an important factor to consider. If you’re looking to buy an investment property, make sure to get insurance quotes and information before making an offer.
Making an Offer
There are plenty of online tools at our disposal to process the legal documents involved in making an offer on your property. Some lenders may require a foreign buyer to be physically present to sign paperwork. If you decide not to be present for this, you can nominate a proxy by way of executed Power of Attorney to complete your deal. We utilize efficient online tools such as Skype, facetime and docusign (to name a few) to exchange ideas, ask questions or have our clients sign offers so you and your realtor can act quickly when an opportunity comes up.
Choosing an agent
If you’re a non-resident looking to buy property in Vancouver, it’s important to work with someone who knows the intricacies of foreign ownership. We have lots of experience selling to non-Canadians and have plenty of resources at your disposal including lawyers, lenders, and property managers. If you’re looking to buy a Vancouver property while abroad (as opposed to an in-person shopping experience) there are plenty of ways we can meet these needs.
We work with a lot of overseas clients and have perfected a process to video and communicate with our buyers about potential properties to eliminate the need to be physically in town to choose a property to buy. We have a dedicated team of lenders, lawyers and insurance brokers who help our non-resident buyers in Vancouver.