Buying a Canadian Ranch
An Overview for Non-Residents
Non-Residents Buying Canadian Real EstateThere 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 http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Transfer_Tax/bulletins_notices.htm.
Goods and Services Tax (Canada) – The seven per cent GST applies to the purchase price of newly constructed and substantially renovated homes.
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.
- Non-Residents, Canada Customs and Revenue Agency
- Tax Treaties, Canada Customs and Revenue Agency
- Cross Border Tax Issues:
When selling or disposing of Canadian real estate, non-residents must notify the Canadian government within ten days of the completion of the transaction to obtain a certificate of compliance. A certificate of compliance will only be issued if the CCRA has received either a prepayment on account of the taxes owing or appropriate security for the prepayment.
On January 1, 2004, the CCRA will start charging a financial penalty to non-resident owners of taxable property in Canada who sell that property and do not, within ten days, provide notice of the sale to the CCRA.
In other words, CCRA is tightening its tax reporting condition for non-residents who own Canadian property and will charge them the greater of either $100 or $25 times the number of days beyond the ten that pass before the sales notice is filed with CCRA. For example, if a non-resident sells taxable Canadian property and does not notify CCRA until 21 days after the ten-day grace period, that individual will be charged a $525 penalty ($25 x 21 days).
There are exceptions to this new policy, though an accountant or lawyer is best suited to interpret their applicability in a given situation. An individual can also apply to waive or cancel the penalty through a government "fairness committee."
- Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada, Canada Customs and Revenue Agency
- Tax Obligations for Non-Residents Disposing of Real Property in Canada
Note - The above is provided for informational purposes only and does not constitute professional advice. For more information, consult legal, financial and real estate professionals, as appropriate.
British Columbia Real Estate Association – December 18, 2003
The bottom line is that buying real estate in Canada is very easy!
From a residency point of view, if you plan to stay in Canada for 6 months or fewer each year, the Canadian government considers you a non-resident, which means that you can still open a bank account and buy property, and so on. If you plan to live in Canada for more than 6 months per year, you must apply for immigrant status.
It is important to note, however, that while the majority of Provinces (British Columbia, Ontario, Quebec, Nova Scotia, Newfoundland, New Brunswick) have no restrictions on foreign ownership of real estate in Canada, some do limit the amount of property/land that a non-resident can purchase. On Prince Edward Island, non-resident buyers must apply to the Island Regulatory and Appeals Commission for land over 5 acres in size, or land with a shore frontage greater than 165 feet. In Manitoba, non-residents are prevented from owning farmland unless they actually plan to move there within 2 years. Non-residents may not own land over 10 acres in size in Saskatchewan, whilst in Alberta they may only own up to 2 plots of land not exceeding 20 acres in total.
Note - Information on investing in Canadian Real Estate is provided for informational purposes only and does not constitute professional advice. For more information, consult legal, financial and real estate professionals, as appropriate.