An important update is available following the law of January 1st 2023 and its modification of March 27th 2023.
We invite you to consult our most recent article to know the current provisions:
Purchase by a temporary resident in Canada
Every year, Quebec welcomes many individuals wishing to settle in Canada, more specifically in Montreal. However, obtaining resident status is not a simple or quick procedure.
You may therefore wonder if it is possible to buy a house in Quebec, more specifically in Montreal, without having permanent resident status.
Keep in mind that in January 2023, a new law will prohibit foreign investment in housing in Canada. However, we advise you to contact our mortgage brokers for advice and guidance.
Is it possible to buy a house in Quebec if you are not a permanent resident?
Canadian law provides that a non-resident or temporary resident may purchase a home in Canada under the following conditions
Keep in mind that buying a house will not change your immigration status in Canada.
The purchase of a property does not give you the right to work or to stay longer than the period provided for by your visa.
The advantage of buying in Montreal is that you are not subject to paying taxes (speculation tax for non-residents) as a foreign buyer unlike in the provinces of British Columbia and Ontario. In these provinces, foreign buyers are subject to a 15-20% tax.
Possible financing for the purchase of a house in Quebec by a non-resident
Our brokers will propose solutions adapted to your situation for the purchase of your home in Quebec as a non-resident.
Define your debt capacity
Before presenting the different possible financing solutions, we remind you of the importance of defining your debt capacity.
To take out a loan in Quebec, you must have a good credit history or prove that you are in a certain financial situation if you do not have a credit history. It is possible to provide a bank reference in your country of origin (if you have been in Canada for less than 12 months), as well as invoices (Hydro Quebec, Bell, rent payments) that will confirm that you have respected the terms of payment.
Conventional loan
You can use a conventional loan from a bank in Canada. In Canada, as in Quebec, a minimum 20% down payment is required.
Insured loan
Under certain conditions, as a non-resident, you can make a down payment of 5% if you have 12 months of credit history in Canada, or 10% if you have less than 12 months of history.
These conditions vary by lender and mortgage insurer.
To take out an insured loan, it is required that
- You bring a down payment of 5 to 10% by depositing it in cash in a Canadian bank account
- you have a work permit
- you present a recent pay slip and a letter of employment confirming that you are not on probation and that your hours of work are guaranteed (no “on call” jobs).
Also be aware that if you are bringing in money from outside of Canada to be used for a down payment on your home or property, this amount must be confirmed as being in your accounts (in your country of origin or in Canada) for at least 90 days. In some cases, the funds may also come from a gift from immediate family under certain conditions.
In some cases, in addition to your loan, you may be able to get a renovation loan to do work on your new home.
We invite you to contact our brokers for help and guidance in choosing the type of loan you want to take out.
Fees for the purchase of a house in Quebec for a Non-Resident
We present the costs involved in buying a home in Quebec for non-residents.
Taxes following the purchase of the house
Once you have purchased your home, you will have to pay a transfer tax (welcome tax). This is a mandatory tax imposed by the municipality for any real estate transfer transaction.
This tax is calculated based on the greater of the purchase price of your property, the consideration written into the deed and the municipal assessment amount and varies depending on the city where you make your purchase.
To find out how much the welcome tax is, you can calculate it with our tool.
Your municipality will send you a tax bill (transfer tax, also called welcome tax) within 3 to 6 months after the transaction is finalized at the notary’s office. Once you receive the bill, you will have 30 days to pay it.
It is possible to be exempted from this tax, if the transaction is carried out between members of the same family (ascendant, descendant, between spouses).
Notary fees
In order to conclude the transaction, you must go through the notary for the signature of the deed of transfer of ownership for your new property, count from 1500 to 2000 $ depending on the notary.
Search for the house
Before you buy, you still need to find the home that is right for you.
To do this, we recommend that you use a real estate broker to whom you explain your expectations, needs and criteria. You will have access to a portal, giving you access to all the properties corresponding to your criteria. Thus, depending on your selection of properties, your broker will be able to obtain all the necessary information so that you can make your choice.
As for visits, your real estate broker also takes care of setting up appointments with sellers in order to conclude a sale. The real estate broker is your representative throughout your real estate transaction, from the research to the signature at the notary’s office.
Fees on the resale of a house in Quebec for a Non-Resident
It is important to understand the difference between your immigration status and your tax status, if you are a tax resident and you sell your principal residence in Canada, you will not have to pay taxes.
If you wish to sell your property in Quebec (Canada) as a non-resident, you must follow a very specific procedure, which the notary will indicate to you, in this case you will pay a capital gains tax, which varies according to your situation (country of residence for tax purposes, presence or absence of a tax convention between Canada and your country of residence).
If a property is located in Montreal (Quebec, Canada), the property is considered Canadian. It will therefore be subject to tax at both the federal and provincial levels.
Therefore, at the time of your sale, you will have to provide a certificate of disposition by non-residents to the Ministère du revenu du Québec and the Canada Revenue Agency within 10 days following the date of signing the deed of transfer of ownership.
If you don’t follow this procedure, the taxman will catch up with you.
We advise you to call upon a tax specialist or an accountant to accompany you during these steps.
Fees on rental income from a house for a non-resident
If you are a non-resident owner of a property located in Canada and you receive rental income, you must pay 25% tax on your rental income.
To do this, you must designate a withholding agent to send 25% of your rental income to the Canada Revenue Agency by the 15th of each month and the rest to the landlord.
In addition, the rental income you earn is subject to Type VIII tax. In order to simplify the payment of tax, non-residents may submit Form NR6. By signing this form, you agree to file a return of your rental income. Once the form is received by the CRA, your withholding agent will submit your monthly taxes based on net rental payments.
Consult a tax specialist for details and the impact of your situation.
The different types of properties in Canada
Here are the 5 types of properties you can find in Canada, Quebec and Montreal.
The individual house
If you choose a single-family home, you are opting for a self-contained dwelling. You own the building and the land. All costs will be at your expense!
The semi-detached house
This is a house where the lot and driveway are individual, but at least one of the walls is shared with another building. All costs related to this part of the property are the responsibility of the owner.
The townhouse
These are semi-detached houses that look alike and are grouped together in long rows. You have your own entrance and your own land.
Condominiums or condos
A condo is a unit in a building owned by several people. If you choose this type of housing, you must pay condominium fees to the syndicate of co-owners, which is responsible for the maintenance of the building.
The duplex, triplex, quadruplex…
A temporary resident is generally limited to the purchase of a condo, a house, a semi-detached house or a duplex, an income property with a down payment of less than 20%, the intention must be to live in the property (it is however possible to rent one of the apartments of a duplex and occupy a unit).
The purchase of a Triplex or more is generally possible with a down payment of more than 20%.
