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Buying a house in Canada by an overseas non resident

Buying a house in Canada by an overseas non resident

Old Jan 23rd 2014, 1:38 pm
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Default Buying a house in Canada by an overseas non resident

Hi

I am thinking of buying a house in Canada but I live in Australia. My partner is Canadian and I am just wondering if there are any taxes on money I would transfer to Canada for a down payment. The province I am looking at is B.C.

Thanks for any help.
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Old Jan 23rd 2014, 2:35 pm
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Default Re: Buying a house in Canada by an overseas non resident

No
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Old Jan 23rd 2014, 2:57 pm
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Default Re: Buying a house in Canada by an overseas non resident

May I ask why you want to buy, and where abouts? It's just a big investment but I guess the house bubble or rise debate has been ongoing for decades now. Good luck.
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Old Jan 23rd 2014, 3:24 pm
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Default Re: Buying a house in Canada by an overseas non resident

Originally Posted by floatsy View Post
May I ask why you want to buy, and where abouts? It's just a big investment but I guess the house bubble or rise debate has been ongoing for decades now. Good luck.
Hi I am thinking of buying in West Kelowna as I hear it is a good time to buy in Canada, and I am thinking of moving there one day. The value for money for property there is much better than here in Perth. I am very interested to hear your opinion though. Do you think there is still a bubble waiting to bust there?

Last edited by erukus; Jan 23rd 2014 at 3:24 pm. Reason: grammar
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Old Jan 23rd 2014, 3:24 pm
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Default Re: Buying a house in Canada by an overseas non resident

Originally Posted by Almost Canadian View Post
No
Thanks
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Old Jan 23rd 2014, 4:25 pm
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Default Re: Buying a house in Canada by an overseas non resident

Mmm the general thinking is that housing is going to go down but with the interest rate announcement yesterday I'm not so sure.

If it's something you aren't going to use for years, I'd wait until interest rates go up next year because that's got to do something. Also the Canadian dollar is plummeting and by then it will have bottomed out (although so is the Australian dollar).

On the other hand lots of people are retiring and Kelowna always seems to be the #1 place to retire to in Canada (or possibly Victoria).

I think it really depends on when you are planning on moving and what you are thinking of buying. Difference between a house and a condo. Also difference between new and used, because of the GST. As a non-resident you wouldn't get the GST rebate on a new house. (But this is not a huge sum, you get back roughly a third of the 5% GST if the sale price is under $450,000).
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Old Jan 23rd 2014, 4:41 pm
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Default Re: Buying a house in Canada by an overseas non resident

Originally Posted by erukus View Post
Hi I am thinking of buying in West Kelowna as I hear it is a good time to buy in Canada, and I am thinking of moving there one day. The value for money for property there is much better than here in Perth. I am very interested to hear your opinion though. Do you think there is still a bubble waiting to bust there?
I think that, as usual, Steve makes some very salient points. The currency exchange rate is a rather important factor when transferring large sums of money. I don't have an opinon on the bubble, namely because whoever knew would be wealthy themself. I have seen so many people say the bubble has to burst, yet house prices are rising all over Canada, New Zealand, and rising again in the United Kingdom. I guess a lot will also depend on how wealthy the China mainland people are as they are big buyers of properties worldwide. Good luck, whatever you decide I am sure there are much more learned people here who can give you some more pointers. Cheers.
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Old Jan 23rd 2014, 5:27 pm
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Default Re: Buying a house in Canada by an overseas non resident

Here's some reading for you
http://www.huffingtonpost.ca/tag/van...housing-bubble

You would also have property transfer tax and would pay the full property taxes each year as a non resident.
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Old Jan 23rd 2014, 6:17 pm
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Default Re: Buying a house in Canada by an overseas non resident

We have a house in West Kelowna that we bought back in 2002 - good time to buy there We spend our summers there and rent it out for the other ten months of the year. You probably already know the area but if I can help with any neighbourhood info I am happy to....
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Old Jan 24th 2014, 2:12 am
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Default Re: Buying a house in Canada by an overseas non resident

Take into account the capital gains tax risk. The property may be subject to capital gains tax in both Canada and Australia. Due to the currency exchange rates used, it is entirely possible that there could be double tax.

Also consider the impact from the deemed disposal capital gains tax on terminating Australian tax residence (if an Australian citizen/PR), also the Canadian provision requiring withholding from the sale proceeds if owned by a non-resident.

If the property is rented out, then a Canadian tax return is likely to be required, as well as reporting the income on an Australian tax return and understanding how to claim credit in Australia for Canadian tax paid.

Cross border real estate ownership adds a layer of tax complexity to life that should be considered in advance.
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Old Jan 24th 2014, 10:58 am
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Default Re: Buying a house in Canada by an overseas non resident

And a house is not a very liquid investment so it depends on your overall portfolio, I imagine.
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Old Jan 24th 2014, 2:45 pm
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Default Re: Buying a house in Canada by an overseas non resident

Thanks for all the information, I will consult an accountant regarding the tax implications.
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Old Jan 24th 2014, 2:46 pm
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Default Re: Buying a house in Canada by an overseas non resident

BTW I am also looking in Kelowna and not Vancouver!!
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Old Jan 28th 2014, 2:34 pm
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Default Re: Buying a house in Canada by an overseas non resident

Originally Posted by JAJ View Post
Take into account the capital gains tax risk. The property may be subject to capital gains tax in both Canada and Australia. Due to the currency exchange rates used, it is entirely possible that there could be double tax.

Also consider the impact from the deemed disposal capital gains tax on terminating Australian tax residence (if an Australian citizen/PR), also the Canadian provision requiring withholding from the sale proceeds if owned by a non-resident.

If the property is rented out, then a Canadian tax return is likely to be required, as well as reporting the income on an Australian tax return and understanding how to claim credit in Australia for Canadian tax paid.

Cross border real estate ownership adds a layer of tax complexity to life that should be considered in advance.
Thanks, I have consulted an accountant here in Australia and she has confirmed that I would have to declare the rental as income here in Australia and also if the house was sold while I am living in Australia then I would also have to pay capital gains tax in OZ.

I wonder what constitutes living in Oz, if I moved to Canada for 6 months for example and sold the house and then moved back after?

Also in relation to the legal side of things does anyone know how that would work with regard to my partner being a Canadian citizen and I not. Would both of our names be on the title as owners?
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Old Jan 28th 2014, 4:55 pm
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Default Re: Buying a house in Canada by an overseas non resident

Originally Posted by erukus View Post
Thanks, I have consulted an accountant here in Australia and she has confirmed that I would have to declare the rental as income here in Australia and also if the house was sold while I am living in Australia then I would also have to pay capital gains tax in OZ.

I wonder what constitutes living in Oz, if I moved to Canada for 6 months for example and sold the house and then moved back after?

Also in relation to the legal side of things does anyone know how that would work with regard to my partner being a Canadian citizen and I not. Would both of our names be on the title as owners?
Does not matter who is on title as the owner. For the home to be exempt of CGT in Canada it would need to be your primary residence, i.e. the owners living in it.

Where you pay tax would be where you were deemed a tax resident.
If you became a tax resident in Canada, to avoid paying CGT, all your world income would need to be reported in Canada during that period.

As far as domicile, tax residency for Australia, check with your accountant. If you retain a home and ties to Aus, you may still be considered a tax resident of that country. The authorities are getting wise to residents of convenience for tax purposes.

Depends on the value and gains on the property, may be more hassle than it is worth.
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