Canada is not only the first choice for many Hong Kong people to immigrate. In recent years, more and more Hong Kong people are buying properties or investing there. Canada’s property market is growing and rental returns are good. The Canadian government welcomes foreign investors to buy local real estate. Overseas people buy real estate locally and enjoy the same ownership rights as local residents. This article will introduce you to the property prices in different regions of Canada, purchase procedures, related costs and precautions for purchase.

Can Hong Kong people buy a property in Canada?

The Canadian government maintains an open attitude towards foreign investors buying local properties, and is open to global investors to purchase different types of local real estate. When purchasing real estate in Canada, non-local residents have the same real estate ownership rights as Canadian residents or citizens, but some provinces have corresponding restrictions on non-residents purchasing agricultural or recreational land.

In addition, buying a property in Canada has nothing to do with holding Canadian citizenship, but depends on the length of stay in the country. If overseas people plan to stay in Canada for half a year or less, they will be regarded as non-local residents by the Canadian authorities and can purchase properties locally as non-local residents, but additional taxes may be required in some areas. On the contrary, if overseas people intend to stay here for more than half a year or more, they need to apply for resident status.

Canadian property prices and the property market

The Canadian property market is still growing. According to data from the National Bank of Canada, property prices in Canada’s seven largest cities rose by 1.95% last year. Among them, Toronto and Ottawa saw the most significant increases in property prices, reaching 10.2% and 15.4% respectively.

 

The following example table shows the average property prices in major Canadian cities and the percentage of price changes in the past 12 months (updated in June 2020):

Canadian cities Average property prices   Percentage change in price in the past 12 months
Toronto CAD 870,000 (approximately HKD 5 million) +10.2 %
Ottawa CAD 479,000 (approximately HK$2.7 million) +15.4 %
Montreal CAD 435,000 (approximately HKD 2.5 million) +9.3 %
Vancouver CAD 1,036,000 (approximately HK$6 million) +2.63 %
Halifax CAD 331,000 (approximately HK$1.9 million) +3.6 %

 

How to find a property in Canada?

Real estate brokers and agents

When purchasing real estate as a foreigner in another country, you will inevitably encounter unfamiliar situations such as local taxes, regulations, real estate information, culture, and language. Therefore, finding local experienced real estate agents is a good solution. If you are interested in buying a property in Canada, you can consider hiring a real estate agent accredited by the Canadian Real Estate Organization.

Choosing a good real estate agent will not only help solve the problem of language and cultural differences, but also enable you to understand the overall housing market conditions and trends, and help you find your favorite real estate. Canadian real estate agents do not expressly stipulate how much brokerage commissions they charge, but they are generally 2%-6% of the real estate price, which is usually borne by the seller.

Canada’s buying process

  1. Assess personal financial ability, such as inquiring about mortgage plans from banks/private lending institutions, obtaining pre-approval for loans, in order to consider different real estate options
  2. Search for local qualified real estate agents to provide information and advice, such as real estate and prices in different regions
  3. Employ a lawyer to review legal provisions and contract details
  4. Once you find the real estate you want, you can ask the real estate agent to help sign a sale and purchase contract with the seller
  5. Let the real estate agent contact the designated real estate lawyer or notary for mortgage transfer, transfer and property registration

Costs related to buying a property in Canada

The related costs of buying a house in Canada include attorney fees, service fees, property insurance, land registration fees and taxes. The total cost depends on the type of property, location and other factors.

Mortgage

If overseas people need to apply for a mortgage loan from a local bank, they need to interview by phone or email and collect personal information, such as assets, personal income, tax returns, personal credit ratings, etc., to obtain loan qualifications. In addition, if a mortgage is required, the applicant must go through the broker or bank that handles the mortgage in Canada, and cannot go through the mortgage process through an overseas bank.

Down payment

For overseas buyers, the down payment is at least 35% of the real estate value. When you need to pay the down payment, you will find that you need to transfer a large amount of money from overseas to Canada. Since banks’ exchange rates often increase prices, the final cost of using banks for international remittances may be relatively high, and it may take multiple working days to complete the remittance procedures.

Taxes

When buying a property in Canada, the tax levied by the local government depends on the area and purpose of the property purchased. The following are some of the main tax items:

  • Non-Resident Speculation Tax: For non-Canadian citizens or permanent residents in the Greater Golden Horseshoe Region, they need to pay 15% of the property value as an overseas buyer taxi
  • Land transfer tax: the tax depends on different provinces
  • Annual property tax or vacancy tax: Some provinces levy annual property tax or vacancy tax. For example, in the Greater Toronto Area, the government will require an annual property tax of 0.75% – 1% based on the assessed value of the house.
  • Capital gains tax: If you intend to use the property for investment purposes and sell it, you will need to pay approximately 25% of the tax at the time of sale
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