The Perfect Buying Guide for an American Moving to Canada
Known widely as the "Land of the Maple Leaf" as a symbol of unity, Canada is an eclectic mix of British, French, and American influences. The appeals of this country in North America are quite obvious: the nature, the livable cities, the publicly funded health care system, and the lower crime rates are all enough for any person, American or not, to plant roots in the Great White North. Though Canada and the United States of America are within proximity to one another, you may be wondering how easy it would be to uproot your life in America and trade it in for a life in Canada. The process of buying real estate in Canada has many differences from buying a home in the U.S.
Continue to read to find the perfect buying guide for an American moving to Canada, and all you need to know!
Who is Involved
To start, let's take a closer look at who will be involved when buying property in Canada. Generally, you will work with the following people in these professions:
- A licensed Realtor: A realtor can represent the buyer while another can represent the seller. Having a realtor on hand can make the moving process and buying process all the more simple for you when making the big leap from America to Canadian citizenship.
- A home inspector: A home inspector has the keen eye to point out any mishaps you can easily avoid when purchasing a previously lived home to ensure that you are truly getting your money's worth out of a house you wish to plant roots in.
- A real estate lawyer: In Canada, unlike many states, the buyer and the seller will need to attain their lawyers, who will be in charge of the closing arrangements.
- Lender: A lender, such as a bank, will be in charge of providing a mortgage. If you are not a Canadian resident but wish to use a bank in Canada, there will be a downpayment of 35%. If you are a resident of Canada, expect a downpayment as low as 5%.
- Insurance broker: An insurance broker can help you avoid more expensive costs, especially if you do not reside in the home yourself.
In America, when house hunting you will find that many amazing web pages can aid in your finding a home. Think Zillow or Trulia. In Canada, there are only 3 primary ways that you can find a home, though these methods are just as effective!
- Online: As we mentioned above, there is no using Zillow or Trulia in Canada, but they do have www.realtor.ca, a real estate industry that Canada owns. There are a few dated search sites with properties that won't be listed, though they are coming soon. Canada also has privacy legislation, making public information a bit harder to come by than you may be used to when living in the States. However, a great website to check out would be AnuragHomes.ca.
- Search Results via Email: An efficient way of searching for properties is via Email. A licensed realtor can set up a search particular to what you are looking for in a house and find new listings that fall within those parameters to send your way via email.
- In-person/via video: If you plan on visiting Canada to go house/property hunting, this can be an effective means to finding your dream home. If you cannot make the trip, don't worry! Many nonresident buyers can get just as good a tour on video or Skype of properties and homes they are interested in.
Contingencies and Conditions
Financing and home inspection conditions are included in offers on Canadian property, and these specific contingencies last only a couple of days once they go through. Once a home inspection has been conducted, or a lender has approved a mortgage the desired property is "firm." This term means that you cannot back out, no matter the reason without paying a hefty price.
Taxes & Money: How it Works
The Canadian dollar is lower than the U.S. dollar, meaning that for an American, there is a better opportunity to pick up Canadian real estate for a fraction of what is paid by locals. As for financing, you can either pay with cash for your property or get a mortgage as we stated above from a Canadian bank. The financing process is similar to the U.S., though Canadian banks are more conservative and risk-averse. As for taxes, unfortunately, the rumor that Canada is the land of taxes is true. If you purchase a property in Canada, these are the types of taxes you can count on being responsible for:
- Land transfer taxes: This type of tax is considered a one-time tax payable to the province after possession of a property is taken. If you purchase a house in Toronto, a second land transfer tax will have to be paid.
- Municipal property taxes: These types of taxes vary by city, so you may be exempt, but an owner of a property has to pay the tax on the value, often levied by the governing authority of the jurisdiction of where the property is located.
- Capital gain taxes: Non-residents are subject to tax on income and/or gains from the sale of taxable Canadian property. This includes homes, condos, vacation properties, or land.
The seller in Canada cannot pay the buyer's closing costs, different than in the U.S. Closing costs in Canada often include the following:
- Balance and purchase pricing: The bulk of this can come from the lender and will become your mortgage.
- Legal fees: Depending on the purchasing lawyer, the amount will vary.
- Title insurance: This can be included in the legal fees.
- Mortgage broker commission: Can oftentimes be paid by the lender if applicable.
- Property tax adjustment: This is a reimbursement to the seller of property taxes paid beyond the closing date.
These are of course only a handful of the many different fees you may be subject to pay when closing on a house. It is always best to be prepared.
Residency and Potential Citizenship
It is true that just about anyone can purchase property in Canada, however, ownership of said property does not give you residency in the country, or immigration rights. Just as in the U.S., there is a strict process that has to be adhered to and followed if immigration into Canada is on your horizon. It is not as easy as many would assume.
For more local information on moving to Canada, finding a property, and understanding residency, check out our website.We specializing in the Waterloo Region including Kitchener real estate and homes in Waterloo Ontario.