Buying and selling real estate for non-residents of Canada
Yes, buying despite being a non-resident of Canada is possible!
Yes, investing in real estate in the province of Quebec is possible!
It’s no longer a secret that real estate investments on the island of Montreal represent a good deal for Canadian non-residents, including condominiums and other types of housing. People from France, the United States and now Asia are investing in Montreal.
However, there are several things that a foreign buyer or seller should be aware of when buying or selling a property. In Canada, the rules regarding real estate transactions are sometimes different from one province to another and offer certain advantages for non-Canadians wishing to invest.
In Montreal, for example, there is no tax imposed on foreign buyers, unlike in Vancouver (20%) and Toronto (15%).
Foreign buyer ban
Coming into force January 1, 2023 a non-Canadian resident cannot buy a residential property until January 1, 2027.
The new Canadian law applies to:
- single house
- divided and undivided condo
- Duplex, Triplex
The law applies to private buyer or purchase made through corporations, trusts or other legal entities.
Exceptions :
- if you own a working permit
- Canadian Citizen spouse/partner
Non Canadian resident can still buy :
- commercial or semi-commercial building
- multiplex rental (4Plex or more)
Advantages of investing in real estate in Quebec for foreigners
- Quality of life: Montreal ranks first among 15 major North American cities for its quality of life, notably thanks to its low crime rate
- First French-speaking city in America
- Second economic centre in Canada
- University city: 4 universities, 2 French-speaking, 2 English-speaking
- Low unemployment rate: 3,6%
- Affordable properties: 2 times less expensive than Toronto and Vancouver
- Properties are easy to buy and sell
- Low interest rate on mortgages (5.00%)
- Low transaction costs (notary, transfer tax)
The main types of housing in Quebec :
Single-family dwelling building and lot
Median price in the Montreal metropolitan area (2022) : 690 000$ CAD
Private space in a building owned by several co-owners. Administered by a syndicate, the monthly condominium fees are used to pay for the maintenance of common areas.
Median price in the Montreal metropolitan (2022) :445 000$ CAD
2 plexs, 3 plexs, 4 plexs, 5 plexs
Independent rental units. This type of housing allows the owner to have their own unit, if they wish, and to rent the other units to generate income.
Median price in the Montreal metropolitan (2022) :810 000$ CAD
The purchase of a property by a non-resident
There are 2 types of financing available:
1 )Conventional loan: prerequisites: * 35% down payment * Copy of your valid passport * Letter of credit from a recognized bank * Statement of account from a Canadian bank (proof of down payment) * Proof of income * Recent pay stub
2) Insured loan: prerequisites: * 5% to 10% cash in a Canadian bank (down payment) * work VISA * Letter of credit from a recognized bank * Recent pay stub * There is no government authorization or certificate and there are no special taxes for foreign buyers
Money from outside Canada: If you’re bringing in funds from outside Canada to invest, these funds must be in Canada at least 30 days prior to the closing date (signing at the notary’s office) and you’ll need to provide statements from the account where these funds were held for the last 3 months.
As a general rule, lenders require that non-resident investors be present to open a bank account in Canadian currency and also be present for the signing of the mortgage. Your bank account must be at a recognized chartered bank or Desjardins.
For the signing of the deed of sale at the notary, it’s possible to have a proxy, but physical presence is recommended.
Purchase brokerage contract mandatory in Quebec
Since June 10, 2022, the purchase brokerage contract is mandatory between the buyer and the broker. The purchase contract allows the broker to represent you in a real estate transaction. You will receive dedicated service for all stages of the transaction.With a brokerage purchase contract, you will have professional advice on the market, statistics, comparable sold, negotiation guidance and much more!
The sale of a property by a non-resident
There are certain procedures specific to the sale of an immovable by a non-resident on Quebec territory. For example, a property located in Montreal (in Quebec) is considered a Canadian property taxable at both the provincial and federal levels of government.
This is why, at the time of the sale, it will be necessary, within 10 days following the date of signature of the deed of sale, to file applications for a certificate of disposition by a non-resident with the Government of Quebec (Ministère du revenu du Québec) and Canada (Canada Revenue Agency).
Failure to do so will result in a fine. With my network of specialists in the real estate field, I’ll be able to help you with these specific procedures related to the sale of an immovable by a non-resident.