home Business & Finance What Everybody Dislikes About Real Estate In Canada And Why

What Everybody Dislikes About Real Estate In Canada And Why

The Canadian real estate market is robust 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 not any citizenship or residency requirements for possessing property in Canada. Indeed, you can live in a Canadian home briefly, even without residency or citizenship; though there are immigration requirements for extended stays. Still, the market is open to investors around the world but to make the most of your investment, it’s important to really have a solid understanding of taxes in Canada.

Property Taxes:

Property taxes in Canada will differ from state-to-state and even determined by the municipality. One of the very first things you should know is that when you purchase property here, you’ll need to pay a provincial transfer tax. Again, this varies between states, but you need to expect to pay between 1 and 2% of the value of the property. Occasionally, there are exemptions to this transfer tax; for example, the first property you buy in Canada will not carry this transfer tax.

As I’ve already alluded, annual property taxes are compulsory and change by municipality. Predicated on the determined value of your property as decided upon 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. If you plan to live in the house, and it is a new or builder-renovated house, you may be eligible for a partial rebate on the GST.

Rental Property Taxes:

In case you plan on buying an investment property in Canada with the aim of renting the property for income, you need to be aware of the Canadian Income Tax Act requirements. The Act stipulates that you pay 25% of the gross property rental income as tax. Visit this website for amazing information about Eddie Yan. Non-residents can usually choose to pay 25% of the net rental income instead; this means you can deduct most of the expenses associated with running the property – you simply need to submit an NR6 form. Specific expenses cannot be deducted, nevertheless; for example, operating and expenses and capital expenses may be deducted, while the cost of furniture or equipment for a rental property cannot. Moreover, 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 costs for residents and non residents. Residents who reside in a property as their principal place of residence can sell a property without paying capital gains tax. Should you own multiple properties, you must designate only one property as your main place of residence. 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 it is possible to see, there are significant tax implications for purchasing and selling properties in Canada.

Troy Myers

Troy Myers is a coordinator for the Hoover Institute and works as an independent journalist. Prior to becoming a full-time blogger, he also worked as a history teacher.
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Troy Myers

Troy Myers is a coordinator for the Hoover Institute and works as an independent journalist. Prior to becoming a full-time blogger, he also worked as a history teacher.