Can I Buy a House in Canada if I Live in the US?
Whether you’re a US citizen looking to make the move up North, or simply looking to diversify your real estate portfolio, you may have at some point considered buying property in Canada. If so, you may have wondered what the rules are for foreigners buying property in Canada, and whether you are eligible to participate in the Canadian real estate market at all. In today’s article, we will talk about the new policies that have come into effect for foreign buyers , and what they might mean for you.
Requirements for Non-Residents Buying in Canada
The Canadian real estate market is facing an affordability crisis. In a (somewhat misguided) effort to mitigate this, the Canadian government launched the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which came into place in January of last year. This policy effectively bans foreign buyers from purchasing property in Canada.
The goal of this policy was to stop foreign buyers from driving up home prices , in an effort to cool down an overheating real estate market, especially in major metropolitan hotspots. Unfortunately, this policy did little to help home prices (as the real underlying issue was a housing supply shortage), and instead has made it very difficult for US citizens, who are not also Canadian citizens or permanent residents, to buy property.
Luckily, there are exceptions to the policy. The foreign buyers ban does not apply to vacation homes such as lake houses or cottages, or to cities with populations of fewer than 100,000 people. Furthermore, if you are a foreign national with temporary resident status (and you have filed Canadian tax returns for 3 of the past 4 years), you are also exempt from the ban in most circumstances.
Financial and Legal Considerations
If you are serious about buying a Canadian home, the first thing you need to do is consider where you want to get your financing from. If you want to go through a Big Bank lender, you may need to open an account with a Canadian bank in order to qualify for a mortgage from them. You will also need to obtain a tax number from the CRA (Canada Revenue Agency) to be able to meet any tax requirements (property tax, etc.) that will come with owning a Canadian home.
Another financial consideration is your mortgage payment itself. If you are a non-resident, you may face higher interest rates and fees than Canadian residents / citizens. You also may be required to contribute a higher down payment (35% compared to 20%, etc.) than your Canadian peers.
It is also important to understand that buying a Canadian property cannot grant you residency or citizenship status. If you are already separately applying for permanent residency, buying property will have no impact on your status or your application. In order to stay in Canada for more than 6 months per year, you may need to apply for immigrant status. Make sure to thoroughly research the legal implications of your property purchase, as well as your plan for using it, to ensure you fall within Federal and Provincial guidelines.
Navigating Cross-Border Real Estate Transactions
If you’re buying property in Canada, you’ll need to consider a number of fees and taxes that may be applied to your transaction. Here are some of the most important items to keep in mind:
- Appraisal costs
- Land transfer taxes and fees
- Provincial sales tax
- Taxation on legal fees, commission, inspection fees etc.
- Title insurance
The best way to understand what costs and laws may apply to you, it is best to speak with a trusted legal professional focused on real estate legislation, or consult a Clover Mortgage broker to assess your options.
Finding the Right Property and Financing
If you are looking to buy a property in Canada, the first step is to try to narrow down your scope through research. Every Province and Territory is unique in its laws, geographical makeup, and real estate market. In general, the Eastern provinces tend to be more affordable than the Western ones, except for major cities in Ontario.
Once you have narrowed down your scope to a province or two, consider whether you want to buy a vacation property, or a residential home in a smaller town. Consider the type of landscape you want to surround your property, do you want to be by the lakeside, or near a ski resort? What sort of climate do you prefer?
The next step, once you’ve determined what type of property you want, and where (generally) you want it to be , is to consult a real estate agency that specializes in cross-border property transactions. Working with trusted professionals can help you more easily navigate the process of buying a new home. Clover Mortgage can also support you in your process through our team of highly experienced mortgage brokers. Contact us today to learn more or to schedule a free personalized consultation.
FAQ
Can a US citizen own Canadian property?
A US citizen can own Canadian property under a few conditions. If you are a Canadian Permanent Resident (or Dual Citizen), if you have a work visa (with the intent to become a permanent resident), or if you have a Canadian Citizen spouse (or common law partner), you are likely eligible to own property. If you meet none of these conditions, you still may be able to buy a vacation property, or a home in a down with a population <100,000, based on the policies outlined in the Purchase of Residential Property by Non-Canadians Act. It is best to consult a real estate, brokerage, or legal professional to assess your options and eligibility.
Can I buy a house if I am not a permanent resident in Canada?
The new rules for buying a house in Canada as a foreign buyer, do make exceptions for the following groups of people:
- Temporary residents (who meet certain criteria)
- Refugee-protected or otherwise protected persons
- Non-Canadians purchasing residential property in Canada with their spouse or common-law partner who is a Canadian citizen
- Individuals registered as an Indian under the Indian Act;
- Work or study visa holders (who can prove intent to become permanent residents)
It is best practice to check in with a real estate, brokerage, or legal professional to ensure you are eligible ahead of time.
How long do you have to live in Canada to get a mortgage?
In order to obtain a Canadian bank mortgage, you must have immigrated to Canada within 5 years. You must have permanent residence status, and a minimum of three months' full employment in Canada. Additionally, you might need to provide a letter of reference from your bank in your home country. However, there may still be ways to purchase a property if you are not a permanent resident, as described earlier.
