The Canadian real estate market is strong and potentially very lucrative. Even during the worst economic times of the new millennium, real estate in Canada weathered the storm remarkably well. Plus, there are no citizenship or residency requirements for possessing property in Canada. Indeed, you can live in a Canadian home on a temporary basis, even without residency or citizenship; though there are immigration conditions for extended stays. Still, the market is open to investors around the world but to make the most of your investment, it is essential to have a strong comprehension of taxes in Canada.
Property taxes in Canada will differ from state-to-state and even determined by the municipality. Among the first things you have to be aware of is that when you purchase property here, you’ll have 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. Occasionally, there are exemptions to this transfer tax; for instance, the first property you purchase in Canada will not carry this transfer tax.
As I’ve already alluded, annual property taxes are mandatory and change by municipality. Predicated on the determined value of your property as determined by the marketplace, property taxes include fees for schools, parks, and other community amenities.
Finally, you will also pay the national Goods and Services Tax (GST) on new home purchases. Should you plan to live in the home, which is a new or contractor-renovated residence, 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 must be conscious of the Canadian Income Tax Act demands. The Act stipulates that you pay 25% of the gross property rental income as tax. You can find additional information on Eddie Yan by visiting this web page. Non-residents can generally pick to pay 25% of the net rental income instead; this means you can deduct most of the expenses related to running the property – you just need to submit an NR6 form. Specific expenses cannot be deducted, however; for example, operating and expenses and capital expenses can be deducted, while the price of furniture or equipment for a rental property cannot. Also, property taxes along with 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 occupy a property as their primary place of residence can sell a property without paying capital gains tax. Should you own multiple properties, you must 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.
Non-residents when selling a property are subject to a 50% withholding tax, and American residents must also report the gains to the Internal Revenue Service. As you can observe, there are important tax implications for purchasing and selling properties in Canada.