According to current Canadian legislation, no additional restrictions are imposed on non-residents of the country. Foreigners even have the opportunity to get a mortgage, but its amount rarely exceeds 65% of the property value.
For example, to purchase a mini-hotel in Vancouver, a non-resident must make a down payment of 35% of the total purchase price, as well as a property transfer tax. The down payment amount is transferred to an account in a Canadian bank, which will provide income information and reference letters from other banking operations. In case of sale of the property, a Canadian income tax is also levied on the foreigner.
When processing documents for mini-hotels, a foreigner will have to pay several taxes. In Canada, these include property transfer tax, goods and services tax, and property tax. The property transfer tax rate is 1% on the first $200,000 of actual market value and 2% on the remaining value of the mini-hotel. Detailed information on the tax rate is provided by the Property Taxation Division of the British Columbia Ministry of Finance.
The goods and services tax is calculated at 5%. It applies to all new and substantially renovated properties. Special attention should be paid to the process of calculating property tax. Quite often, the seller of the mini-hotel has already paid the municipality the amount of the annual property tax. In this case, the buyer reimburses the seller for the remaining part of the year.
When acquiring real estate, no less attention should be paid to residency status and income tax. Residents of the country are all foreigners who are in Canada for more than 182 calendar days and do not leave the territory of the state. If a person is recognized as a resident, they are obliged to pay income tax. As for non-residents, they pay income tax only on income whose source is in Canada. The specifics of tax collection and filing an income tax return are determined by the type of income received.
Currently, Canada prevents double taxation because it has agreements with many countries. When selling or buying Canadian real estate, a non-resident must notify the Canada Revenue Agency. They have 10 days from the completion of the transaction to do so. The tax agency issues a certificate of compliance with income tax requirements for non-residents.
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