A Positive Experience Regarding Real Estate In Canada

The Canadian real estate market is robust and possibly very rewarding. Even during the worst economic times of the brand new millennium, real estate in Canada weathered the storm remarkably well. Plus, there aren’t any citizenship or residency requirements for possessing property in Canada. Indeed, you can live in a Canadian residence on a temporary basis, even without residency or citizenship; though there are immigration conditions for prolonged stays. However, the marketplace is open to investors around the world but to make the most of your investment, it is essential to truly have a strong comprehension of taxes in Canada.

Property Taxes:

Property taxes in Canada will differ from province-to-province and even depending on the municipality. One of the first things you have to understand is that when you purchase property here, you’ll need to pay a provincial transfer tax. Again, this varies between provinces, but you should expect to pay between 1 and 2% of the value of the property. Sometimes, there are exemptions to this transfer tax; for example, the first property you purchase in Canada does not carry this transfer tax.

As I’ve already alluded, yearly property taxes are compulsory and change by municipality. Based on the assessed value of your property as dependent on the marketplace, property taxes include fees for schools, parks, and other community amenities.

Finally, you’ll also pay the federal Goods and Services Tax (GST) on new home purchases. If your plan is to live in the house, and it is a brand new or contractor-renovated house, you might be eligible for a partial rebate on the GST.

Rental Property Taxes:

If you’re planning on purchasing an investment property in Canada with the aim of renting the property for income, you have to be aware of the Canadian Income Tax Act demands. The Act stipulates that you pay 25% of the gross property rental income as tax. Learn more on Eddie Yan from this source. Non-residents can usually select to pay 25% of the net rental income instead; this means you can deduct most of the expenses associated with managing the property – you simply need to submit an NR6 form. Specific expenses can’t be deducted, however; for example, operating and expenses and capital expenses could be deducted, while the price of furniture or equipment for a rental property cannot. Additionally, property taxes as well as mortgage, bank loan, or line of credit interest payments are all tax deductible.

Selling your Property:

Pay close attention, as selling your property in Canada has different prices for residents and non residents. Residents who reside in a property as their principal place of dwelling can sell a property without paying capital gains tax. Should you have multiple properties, you have to designate just one property as your principal place of dwelling. Sale of properties that are not your main place of residence are subject to capital gains tax.

Nonresidents when selling a property are subject to a 50% withholding tax, and American residents must also report the profits to the Internal Revenue Service. As you can see, there are important tax implications for purchasing and selling properties in Canada.

Peter Cooper

Peter is a writer of the daily blog Share And Share. His favorite books include, Ubik, The Recognitions and Dog Soldiers.