What expats need to know about buying Canadian real estate

The Canadian government does not restrict foreign ownership of real estate, so immigrants from other parts of the world can buy property in Canada just as citizens do.

However, some provinces restrict the amount of land that a non-resident can buy. In one case, an American was fined for buying a 76-hectare piece of land on Prince Edward Island (under the Land Protection Act, anything larger than two hectares must be approved by cabinet). In addition to P.E.I., Alberta, Saskatchewan, Manitoba and Quebec also limit the amount of agricultural land foreigners can buy but this wouldn’t impact most homebuyers.

If you’re an immigrant who’s planning to finance a real estate purchase in Canada, you must apply for a mortgage through a Canadian bank because foreign banks cannot register mortgages in Canada. Some lenders require non-citizens to pay a down payment equal to at least 35 percent, while others have specific mortgage programs tailored to borrowers who are new to Canada. Genworth’s New to Canada program, for instance, insures¬†up to 95 percent of the property’s cost to buyers who have immigrated or relocated to Canada within the past five years. Scotiabank has a program called StartRight for temporary residents living in Canada.

Because home-buyers from other countries may not have had the chance to establish a long credit or employment history in Canada, lenders may require that the borrower have worked a minimum of three months with their Canadian employer or request extra documents to establish the borrower’s creditworthiness. This documentation might include letters of reference from bankers or employers, credit reports from the home country, records showing 12-months of on-time rent payments, immigration documentation such as work permits and proof of funds for the down payment. You may also need to pay for mortgage default insurance, because the risk of default is higher among non-citizens.

Home-buyers who are new to Canada should also consider the impact of their status on transfer and property taxes. In B.C., first-time home-buyers may qualify for a transfer tax exemption, but they must be a Canadian citizen or permanent resident and have lived in B.C. for 12 consecutive months before the date they register the property (filing income taxes as a B.C. resident for at least two out of the last six years also counts towards the exemption). Some municipalities also have home owner grants that will lower property taxes for citizens and permanent residents.

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