Canadian Taxes & Foreign Buyers Of Toronto Real Estate
You do not need to be a Canadian citizen to own property in Toronto. As a non-resident of Canada there are no restrictions on foreign ownership of Toronto real estate. There are also no additional taxes foreign buyers must pay when purchasing real estate in Toronto.
However, all buyers, whether local or foreign, who purchase real estate in Toronto are required to pay two Land Transfer Taxes (LTT) – one to the province of Ontario and one to the City of Toronto. A purchase of a $1M home or condo in Toronto translates into approximately $32,200 owing in Land Transfer Tax. A simple way to determine the approximate amount of funds you will need to set aside for land transfer tax is to use this Land Transfer Tax Calculator.
If you are a first time home buyer you are eligible for certain rebates and tax credits. In order to be considered a first time homebuyer you cannot have owned property before in your lifetime anywhere in the world. First time buyers can get a rebate of up to $2,000 which is equivalent to the first $227,500 of a property’s value for the Ontario Land Transfer Tax and a rebate of up to $3,725 which is equivalent to the first $400,000 of a property’s value for Toronto’s land transfer tax.
If you are purchasing a new house or condo from the builder or buying a house that has been extensively renovated, the Harmonized Sales Tax (HST) of 13% will apply. Buyers of new homes and condos can apply for federal and provincial government rebates to offset portions of the HST. The HST does not apply on the purchase price of resale homes and condos. Also a buyer does not pay Land Transfer Tax on the HST portion of the purchase price.
While there are no additional taxes for foreign buyers purchasing real estate in Toronto there are tax implications for foreign owners when they sell property in Toronto. A foreign seller may be subject to a non-resident withholding tax of 25% on the sale price of the property. Further details can be found on the Canada Revenue Agency website. One should consult with their own accountant to fully understand the Canadian tax rules and implications of selling a property in Toronto as a foreign owner.
Once you are an owner of property in Toronto you will have to pay yearly property taxes to the City of Toronto. The annual property tax is calculated by multiplying the tax rate and the current value of the property. The City of Toronto mails out tax bills twice a year.
Victoria Boscariol is a real estate agent in Toronto Canada with Chestnut Park Real Estate Limited Brokerage. With over 20 years experience, Victoria has been helping people successfully buy and sell condos and houses in Yorkville and downtown Toronto. As a Certified International Property Specialist (CIPS) she has worked with Buyers from around the world moving to Toronto from China, Russia, Brazil, India, South Africa, United Arab Emirates, Jordan, Cyprus, Italy, Germany, The United Kingdom, Australia and the United States.
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