offers beautiful and varied landscapes, together with a totally
different way of life to many European countries which is one of the
main attractions to foreign nationals. The economy is heavily dependent
on natural resources such as oil, gas and minerals and while obviously
tied in the main to commodity prices, the economy has performed very
well of late.
is actually the second largest country in the world by landmass, and
while not all of the land is fully populated (77% of the 32 million
population live in towns or cities) it really is a country of
discovery. The close relationship with the USA offers a fair degree of
safety to the overall economy, with additional trade relationships
further strengthening the situation.
The Canadian property market:
is very different to the usual European market, although on further
investigation it seems to be a lot simpler. Generally houses are more
spacious with large basements being normal. This can often double the
floor space of your property. Not generally seen as a first port of
call for relocating your life,
Canada really does have a lot to offer
next 20 years are expected to see an increase in the so called “baby
boomers” sector of older people who have money to spend. While
historically it has been assumed that the older generation is not very
active in the housing market, research in
Canada suggests that many will
downsize to smaller properties. This will create an increase in demand
for these types of properties, and leave the larger properties for some
of the younger areas of the population.
Increasing numbers of British people are
choosing Canada as the location for their second home, attracted by its
spectacular scenery, laid-back lifestyle, political and social
stability. Easier travel and increasing coverage by low cost airlines
are also considerations, as is the fact that Canada’s international
homes market is still young and developers seeking to attract British
buyers therefore have to provide good value.
Rules and Regulations:
Regulations on property purchase vary throughout
Canada, so it is very
important to find out about them when you are researching a particular
Columbia, New Brunswick,
for example, there are no restrictions on foreign ownership, provided
you spend less than six months per year in
Canada. However, in
which is located within a national park, only businesses and employees
of the park can own property, and even they can do so only through
renewable 42 year leaseholds. Each province has a different limit on the
amount and kind of land that can be owned.
Unless you are buying a new property from a developer, potential
purchasers are required to register with an estate agent.
The purchase process in
Canada is different from that in the UK and the
practice of gazumping unknown.
The majority of Canadian estate agents cooperate in multiple listings so
one estate agent can usually access information on all available
properties in a particular area.
Once you have chosen a property, you should appoint an independent
realtor (or buyer’s agent) to represent your interests. In the majority
of property transactions, the seller pays both the agents involved. Your
agent will draft an Offer to Purchase, which will then be submitted with
a deposit, which is refundable should the sale fall through.
Once the offer is signed by both vendor and purchaser and any conditions
(for example, mortgage approval) are met, the sale can proceed.
Purchasing costs in Canada vary from province to province and usually
comprise between 4.7 and 11 per cent of the property price, making it
one of the cheaper place to buy from a fees perspective.
A Goods and Services Tax (GST) of 7 per cent and a Provincial Sales Tax
(PST) of up to 10 per cent are usually included in the asking price of
new homes. Alberta is the only province that does not levy PST.
In New Brunswick,
Newfoundland and Labrador
and Nova Scotia, GST is combined with an 8 per cent provincial retail
sales tax called Harmonised Sales Tax (HST) of 15 per cent.
Subject to certain conditions, GST and HST can be reduced or avoided
(see the Taxation section).
Buying costs vary between provinces, but purchasers should allow up to
£2,000 for legal fees, a survey and insurance. Purchase tax of between
0.5 per cent and 2 per cent of the price is also payable.
When deciding how to finance your purchase, consider all the options.
Paying cash is recommended, but you may not want to tie up a relatively
large sum in this way.
There are other options are remortgaging your UK home or arranging a
mortgage on your Canadian property through a Canadian or UK lender.
Remortgaging offers the easiest solution. Releasing equity in a UK home
means that the second home can be purchased for cash, without the need
for another mortgage. However, this may only be feasible for those who
own their first home outright.
Several UK mortgage providers will lend funds of up to 80 per cent of
the purchase price for second home purchase over, typically, a 15-year
Canada’s currency is the
Canadian Dollar ($CDN). The current rate of
exchange is $2.01 CDN to £1.00 sterling.
There are no currency restrictions on the import or export of local and
foreign currency. However, when considering moving money overseas,
either in a lump sum or to meet regular financial commitments you should
consult a financial adviser or foreign exchange risk expert, who can
advise on ways of reducing currency fluctuation risks, such as spot or
federal and provincial governments both impose income taxes, which
together make up more than 40 per cent of total tax revenue. Taxes are
progressive, the well off paying a higher percentage of their income
than the less well off.
Canada has no Inheritance Tax as such.
Inheritance is treated as the disposal of an asset and is therefore
subject to Capital Gains Tax, currently 25 per cent.
A number of other federal, provincial and local taxes are payable by
individuals, including sales taxes and property taxes. Residential
properties are subject to annual local taxes of between 0.5 per cent and
2 per cent of their value.
Taxation of non-residents:
Non residents pay federal and
provincial income tax on all Canadian sourced income. As the UK has a
comprehensive double taxation treaty with
Canada, taxes paid in
may reduce UK liability.
GST and HST are charged on new homes purchased for private use. However,
in some circumstances, i.e if the owner of a resort property commits it
to a rental pool and uses it for 10 per cent of the year or less a home
is classified as commercial property and not subject to the tax.
Rental income is taxed at 25 per cent, but expenses can be offset
A non resident selling a property in
Canada must pay Capital Gains Tax
of 25 per cent, levied on a percentage of the profit.