Updated: Jan 18
Many international students, investors, etc. and other types of non-residents of Canada have asked me how purchasing Real Estate in Ontario would work for them.
Are there any taxes they must pay as non-citizens, for instance? Are there any rules relating to citizenship regarding real estate? This blog post will cover the major points that non-residents should bear in mind when seeking to purchase property in the Greater Horseshoe Region and beyond.
1) Firstly, there are no rules relating to citizenship regarding real estate. Namely, there is no restriction on how much property or the type of property you, as a non-citizen, can purchase.
What matter is whether you are a resident or not. A non-resident is defined as someone who does not earn an income in Canada and does not file taxes in Canada.
International students are generally residents of Canada since they spend more than 183 days residing in Canada.
2) However, since 2017, there has been a foreign buyer's tax (known as the Non-Resident Speculation Tax or NRST) on property in the Golden Horseshoe Region. The NRST adds 15% to the purchase price of all homes purchased by foreign speculators. Immigrants and anyone with a student or work visa are exempt, as they do not count as speculators.
3) Financing is available for foreign buyers. The lender will ask for a larger downpayment if you are a non-resident, usually at least 35% of the purchase price (if you are living anywhere other than Canada or U.S.). If you are living in the U.S., the lender will usually ask for a downpayment of 20%. Note that your down payment cannot be a gift from another person or entity.
4) Before placing an order, you should transfer your funds to a Canadian bank. I suggest that you transfer your funds before you start looking for listings, since the average listing sells in less than a day and depending on where you are located, it can take as long as a couple of weeks for the funds to clear.
5) It is possible to buy while overseas. Most homes now have professionally-taken panorama pictures and videos along with measurements and you can use real-time communication apps such as WhatsApp, Facetime and Skype to talk to agents and take virtual tours of homes.
To sign mortgage documents and close the deal, you are required to either sign in person or have a power of attorney.
6) How can I, as a non-resident of Canada, use a Power of Attorney (POA) to buy/sell real estate?
You should speak to WDL LAW Professional Corporation about your specific case. Generally speaking, you (as the donor of the POA who is living overseas) should contact me directly and tell me the details of your case, who you are (provide unexpired identification such as your passport or driver's license) and what you seek to do.
I will then send you a draft POA complying with all relevant rules in Ontario with all of your information filled in. You can look over it and talk to me re: anything that needs to be changed. After the POA has been finalized, you can print it off and sign it. You will have to sign the POA in front of two witnesses. In order for the POA to have effect and be valid in Ontario (which is a pre-requirement for you to successfully buy/sell real estate in Ontario), you must meet the requirements regarding POAs in Ontario's Substitute Decisions Act.
According to the Substitute Decisions Act, POAs are only valid in Ontario if:
the POA document is properly completed, signed and witnessed
the POA must be witnessed by two individuals who are eligible to serve at witness - note that your spouse, partner, attorney or attorney's spouse/partner and your children (including anyone you treat as a child) are NOT allowed to serve as a witness to you signing the POA. Further, the following people also cannot be a witness: anyone who has a "Guardian of Person" or "Guardian of Property" and anyone under the age of 18.
Note that you do not need to submit the POA to the Attorney General's office nor the Office of the Public Guardian in order for the POA to be legally binding. We encourage you to contact a lawyer to go over the POA, to ensure that the POA is executed properly.
After this, your lawyer will have to find an Agent to verify your identity if you are living abroad and cannot meet with the lawyer face-to-face. The Agent will meet up with you in person to verify that you are who you say you are, so bring two pieces of unexpired photo ID (such as driver's license and passport).