Canada

Buying real estate in Canada is relatively easy and there are few restrictions to resident or foreign ownership.

From a residency point of view, if you plan to stay in Canada for 6 months or less each year, the government considers you a non-resident. If you plan to live in Canada for more than 6 months per year, you must apply for immigrant status.

It is important to note, however, that while the majority of Provinces (British Columbia, Ontario, Quebec, Nova Scotia, Newfoundland, New Brunswick) have no restrictions on foreign ownership of real estate in Canada, some do limit the amount of property/land that a non-resident can purchase. On Prince Edward Island, non-resident buyers must apply to the Island Regulatory and Appeals Commission for land over 5 acres in size, or land with a shore frontage greater than 165 feet. In Manitoba, non-residents are prevented from owning farmland unless they actually plan to move there within 2 years. Non-residents may not own land over 10 acres in size in Saskatchewan, whilst in Alberta they may only own up to 2 plots of land not exceeding 20 acres in total.

Capital Gains Tax
When a non-resident sells Canadian real estate, he/she is required to pay the appropriate amount of taxes on any capital gain. The normal Canadian tax rates will be applied to 50% of the gain.

Capital Gains Tax, which is essentially a profits tax, and in Canada it applies to residents and non residents. In Canada 50% of the GAIN is taxed at the marginal tax rate and the balance is charged at the top marginal tax rate of 46.9%.

For example if a property owner earned $1,000,000 CDN in capital gains through the disposal of a property the gain would be taxable at 46.9%. Therefore, the owner would be liable to tax of $234,500 CDN based on an assumed profit of $1,000,000 CDN.

Inheritance Tax
Inheritance Taxes are taxes that relate to the transfer, upon death, of assets from spouse to spouse and to children. In Canada there is no Inheritance Tax.

Succession Tax / Probate
Succession Taxes like Inheritance taxes mentioned above are taxes that relate to the transfer, upon death, of assets from spouse to spouse and to children. They are generally referred to as “Probate Fees”. In Canada the only tax relating to succession and probate is 1.4% of that portion of an estate in excess of $50,000 CDN of value, and 0.6% for that portion of an estate valued between $25,000 CDN and $50,000 CDN. Succession Taxes in Canada apply only on the net value of the estate. Therefore, the estate value that is taxed is the value less any mortgages against the property.

Wealth Taxes
Many European Countries notably Spain, Portugal and France impose an annual wealth tax based on the Market value of the property. This provision does not apply in Canada.

Solutions for Canadian Property Owners

Trust Structure: A trust can be created to hold property for the benefit of Beneficiaries with provisions providing for the distribution of the property on the Settlor’s death. Because the property is owned by the trust, it is not considered part of the Settlor’s estate, and is therefore not subject to probate fees.