By Cesia Green
As discussed in our previous post on closing costs for condo buyers, purchasing or selling a condo involves a number of costs above the actual purchase price, such as property tax and condo fee adjustments, legal fees and disbursements, and Land Transfer Tax and document registrations.
If you are not a Canadian resident, there are also some additional concerns.
As discussed in our previous post on closing costs for condo buyers, purchasing or selling a condo involves a number of costs above the actual purchase price, such as property tax and condo fee adjustments, legal fees and disbursements, and Land Transfer Tax and document registrations.
If you are not a Canadian resident, there are also some additional concerns.
Warning: tax law ahead.
Canada has tax treaties with many other countries, so that taxes are only paid once. However, in order to ensure that taxes are properly paid, the Income Tax Act provides that non-residents must surrender a portion of non-business income, as well as a portion of the proceeds on the sale of any capital property (unless the non-resident obtains a tax clearance certificate before selling the property), in order to cover potential tax liabilities.
As a non-resident condo buyer, there would be no additional initial cost to purchase simply because of being non-resident, although there are higher minimum down payments required. However, if you are buying the condo as an investment, and intend to rent it out, you will have tax withheld on an ongoing basis on the rental income.
As a non-resident condo seller, you would have to set aside enough of the sale proceeds to cover the capital gains tax. You could need to set aside as much as 25% of the sale proceeds for withholding tax; obtaining a clearance certificate can take as much as four months.
There are no bars to non-residents purchasing property in Ontario, but you would be wise to speak to both a lawyer and an accountant before buying in order to be sure that it is the right investment for you, and well in advance of selling to ensure that you can get your sale proceeds promptly.
As a non-resident condo seller, you would have to set aside enough of the sale proceeds to cover the capital gains tax. You could need to set aside as much as 25% of the sale proceeds for withholding tax; obtaining a clearance certificate can take as much as four months.
There are no bars to non-residents purchasing property in Ontario, but you would be wise to speak to both a lawyer and an accountant before buying in order to be sure that it is the right investment for you, and well in advance of selling to ensure that you can get your sale proceeds promptly.
Cesia Green is a partner at Wall-Armstrong & Green (www.wall-arm.ca) in Barrie, where she practices in the areas of residential real estate, estate planning and estate administration for clients in Barrie and the Greater Toronto Area. You can read the real/estate blog at www.wallarmstrong.wordpress.com or follow Cesia at twitter.com/cesiagreen.
