Can foreigners buy/sell properties in Toronto? Of course!

Toronto’s real estate market is open to just about anyone, including Canadian citizens and noncitizens alike, from expats to investors, you name it! There are no restrictions on the type and the amount of property you can buy and sell in Canada, which creates a lot of flexibility and opportunities to obtain investment properties or even a home.

Who is considered a non-resident?

1. Anyone who routinely or normally lives in another country and isn’t a resident of Canada
2. A person with no significant residential ties in Canada and has either lived outside the country throughout the tax year or has stayed in it for less than 183 days in a tax year

Are you or someone you know who is a non-resident who wants to buy in the Toronto Market? It is imperative to hire the RIGHT real estate agent!

Choosing the right local realtor who specialises in the Toronto Real Estate market, can provide you with all the necessary information, guidance and advice will ultimately be responsible for the success of purchasing a property. It is highly recommended to hire an agent who has experience working with non-residents sellers. There are aspects which are different from a typical property sale, and you want to make sure they know the correct process and know what they are doing. 

Communication is super important for this process. Especially if you are located in a different country, you want someone who is flexible and can communicate in your time zone and in your preferred method of communication – email, call, whatsapp, video call, etc. 

Keep in mind that each agent has their own area of expertise. To best find an agent that fits your needs, you need to know what those needs are. For example, are you looking to buy a house or a condo? What city(s) or neighbourhood(s) do you have in mind? What’s your estimated budget? ? If you’re looking specifically for someone to represent you when buying a house, you can always look for an agent who has specific credentials.

You want to be confident in your decision in choosing your agent, so it’s recommended to look up reviews and referrals. Luckily, most of these can be found online providing buyer’s confidence by searching through online real estate brokerages. With this, you’ll have the trust of agency reputation and a greater selection of agent expertise to choose from with notable track records.

After looking them up, the next step is to interview them, get to know them and gauge their expertise. This will help you have a better understanding of how they work and if you will get along with them. Having a good working relationship can make a huge difference on your selling experience. Prepare a list of questions and concerns that are important to you. 

Find out what service they offer and the technology they use. You’ll be relying on their expertise and network of contacts to prepare and stage your property. To sell a property in Toronto, you will need a real estate lawyer, whom your agent will be able to recommend a good one. Technology can simplify the procedures and using tools like Skype, electronic signatures and digital documents can facilitate property sales with non-residents of Canada.

Taxation

The selling cost and taxes for non-residents work differently than residents when it comes to tax implications. Selling a property as a non-resident, expect a 25% non-resident withholding tax, calculated as a percentage of your property’s sale price. The process has forms that need to be filled out, procedures to be followed, and penalties for non-compliance, which all can be done with your accountant. 

Alternatively, a Certificate of Compliance to the sale of the property can be filed and approved by the CRA to reduce or eliminate the withholding taxes. Upon the filing of this Certificate of Compliance, the 25% withholding tax required is calculated on the gross sales proceeds net of the purchase cost of the property (net profit).

Also, non-residents are required to file a Canadian tax return by April 30 following the year they sold their property. This is so part of the withholding tax is refunded to the seller as the 25% withholding tax is usually a lot higher than the actual taxes owing. You can also claim expenses like legal fees and commissions against the income from the sale.

This can be an overwhelming process, so to know and fully understand the tax implications of selling a property in Toronto, you will need to consult with a Canadian tax accountant.

For more details, visit the Canadian Revenue Agency website.

The home selling process as a non-resident is pretty much the same as it is for a Canadian resident, except you won’t necessarily be present for the transaction.