Non-Residents Buying Canadian Real Estate

Non-Residents Buying Canadian Real Estate

There are no restrictions for non-residents purchasing real estate in Canada, though they may become subject to Canadian income tax laws, and will certainly encounter the following taxes on their transactions:

Property Transfer Tax (British Columbia) – The tax rate is one per cent on the first $200,000 of the property's fair market value and two per cent on the remaining fair market value. For more information, visit the Government of British Columbia’s Property Taxation Branch’s website at www.rev.gov.bc.ca/rpt.

Goods and Services Tax (British Columbia) – The 5% GST applies to the purchase price of newly-constructed and substantially renovated homes. In addition, a temporary transition tax of 2% may apply on the purchase price of a new home where construction or substantial renovation of the new home was at least 10% complete before April 1, 2013, and either possession or ownership of the new home transfers, or a deemed sale of the new home transfers, before April 1, 2015. For more information, visit the Canada Revenue Agency website at www.cra-arc.gc.ca.

Property Tax (municipal) – If the seller has already paid the full year’s property taxes to the municipality, the buyer will have to reimburse them for the remainder of the year’s taxes.

Residence Status and Income Tax

If non-residents stay in Canada for more than 182 consecutive days, they may be considered Canadian residents for Canadian income tax purposes.

Non-residents of Canada pay tax on income received from sources in Canada. The type of tax paid, and the requirement to file income tax returns, depends on the type of income received.

Canada has tax treaties with many countries, including the United States. A tax treaty is designed to avoid double taxation for people who would otherwise pay tax on the same income in two countries.

More information:

  • Non-Residents, Canada Revenue Agency

www.cra-arc.gc.ca/tx/nnrsdnts/menu- eng.html

  • Tax Treaties, Canada Revenue Agency

www.cra-arc.gc.ca/gncy/lrt/vnt- eng.html

  • Cross Border Tax Issues: The Canadian Perspective, Reinhold G. Krahn. Vancouver: Lawson Lundell, December 2000

www.lawsonlundell.com/media/news/258_CrossBorderTaxIssues.pdf