Canada is a new frontier that real estate investors are exploring. The laws are quite liberal, in the sense that you do not have to be a Canadian resident to own property in Canada. The business can be quite profitable if you understand the laws fully and act accordingly.
Citizenship or residency is not a requirement for owning property in Canada. You can even own property in Canada if you are a non-resident. You will only have to pay the annual tax returns. You can also own a Canadian property on a temporary basis. You only have to comply with the immigration requirements if you want to become a permanent Canadian resident.
Rental Property Tax Values:
A property owner is required to have twenty-five percent of the gross property rental income remitted each year. This is due to Canadian Income Tax Act. Non-residents can opt for a second plan. They can fill out an NR6 form and pay twenty-five percent of the net rental income after expenses. If the property incurs losses, then the previous taxes can be collected back.
It matters in taxes if you are a partner or co-owner. It also depends on whether your property is considered business or rental.
Property Tax Values:
There is a provincial property tax when you buy your property. This tax is different for different provinces. You can be exempted by these if you are buying a first property in Canada. There are also annual property taxes by the municipalities. There is also the federal Goods and Services Tax for the purchase of new homes.
Loan (Home Equity):
For a residential property in Canada, you can get your home equity loans with a home equity line of credit (HELOC) or a reverse mortgage.
A HELOC offers a secure loan for your property or a credit line. It is a second mortgage on your home. It is a far more flexible option than the regular mortgage. You can make the payment at any time. However, the interest rates are a little bit higher than those of conventional mortgages.
A reverse mortgage is an ideal option for those over the age of sixty. It allows the homeowner to with draw payments regularly. These payments should total up to be forty percent of the current appraised value of the house. These proceeds are all free of taxes.
Selling off Your Canadian Property:
There are different laws governing the sale of Canadian property. If you are a Canadian citizen and have owned the place you are selling as a principal place of residence, then there will be no taxes on your capital gains.
If you are a Canadian citizen but the property was not your principal place of residence, then you have to pay the taxes on the capital gains for the number of years the property was not your principal place of residence.
If you are a non-resident, then the Canadian government will take fifty percent of your capital gains as withholding tax. They also have to give a clearance certificate to the buyer that has been prepared by the CRA.
Other Options in Real Estate Investments:
There are companies that manage a portfolio of real estate assets. These are called the Real Estate Investment Trusts (REIT). They distribute to their shareholders a large amount of the tax returns. REIT has to maintain ninety-five percent of its income passive revenue sources and seventy-five percent from rent and capital gains.
Bottom Line:
The Canadian laws allow you to invest freely in their real estate. They have liberal laws that do not bind you to be a Canadian resident to own property in Canada. You only have to monitor their tax laws diligently. Investing in real estate in Canada can be real profitable.
