Purchasing Property in Canada

Canadian law allows foreigners (non-residents of Canada) to buy, own, rent, and sell property in Canada without many limitations. This open-door policy is similar to the approach to foreign property ownership in the US, UK and Germany.

There are no differences in the ownership rights between Canadians and non-citizens.

You do not need to be personally present to purchase property in Canada. A real estate agent or lawyer can facilitate the purchase of property on your behalf. Legal documents pertaining to the purchase of property may also be couriered or faxed to you in your home country.


Unlike in other countries, purchasing property in Canada does not give residency rights to non-Canadians. You are not permitted to live or work in Canada just because you own property in Canada. Permanent resident status can only be obtained through the immigration process.

To work and live in Canada you must have a work permit and be legally admitted to Canada under a temporary resident visa or as a permanent resident.


Non-Canadians are eligible for receiving a mortgage for 65% of the purchase price of a property in Canada. Non-Canadians must make a down payment of at least 35% of the purchase price.

The normal down payment for Canadians is 5-10%. The minimum down payment is 5%. Canadian residents can typically receive financing for up to 95% of the purchase price for a primary residence, over a 25-year term.

Mortgages are only available from Canadian financial institutions. Foreign banks cannot register mortgages in Canada.

To qualify for a mortgage in Canada you must first be interviewed by a financial institution via phone, fax, or email to gather personal information such as assets and liabilities, and employment and income information. You may have to submit income verification, tax returns, credit bureau or bank’s reports, down payment confirmation, copies of two pieces of ID, and real estate appraisal.

Applications are considered on a case-by-case basis. Mortgage approval typically takes 24-48 hours after application.

Real Estate Agencies

If you chose to purchase property through a real estate agency, you may find many reputable agencies in your area online, in local newspapers, or through word of mouth.

You can also use Canada’s free national Mutiple Listings Service (MLS) through http://www.realtors.ca to search for properties available to purchase throughout the country. The MLS will indicate what real estate agencies represent each listed property.

A buyer can purchase property through any realtor, regardless of whether that realtor originally listed the property. There are usually two realtors involved in the sale: the seller’s realtor, and the buyer’s realtor, who act on behalf of these parties. The commission received on the sale of a property is divided between these two realtors, unless one realtor represents both parties.

All real estate agencies in Canada use English as a first language, except in Quebec and some areas of New Brunswick. Some real estate agencies may also have representatives who can communicate in other languages, such as Arabic, Mandarin, German, etc. If you do not speak English, and your real estate agency is unable to provide services in your first language, you may want to seek the assistance of a translator.

To purchase a property through a real estate agency, contact a real estate agency and provide them with your requirements (type of property, location, number of bedrooms, age of property, cost of property). A good real estate agent will search for a property until they find exactly what you need. You are free to change agents at your discretion.

During a sale, real estate agents will take care of negotiations and the preparation of legal documents. They can also assist you in property inspections, obtaining a mortgage, arranged home appraisals, moving and relocation companies, etc.

If you are interested in purchasing a property, your real estate agent makes an offer to the seller on your behalf. The offer should include all of the contents of the property included in the sale (referred to as ‘chattels’), and should be subject to a building inspection (commissioned by the purchaser), and the purchaser meeting certain financial obligations. Offers may be negotiated in terms of price, completion or closing date, and chattels.

Once an offer is accepted an Agreement of Purchase and Sale is drawn up and signed by both parties. This agreement includes final purchase price and deposit price. The deposit is placed in a trust account and is credited towards the purchase price once the purchase transaction is complete. Offers are legally binding and, once accepted, the deposit must be paid. If you withdraw from the offer you may lose your deposit and be sued.

Private Sales

Many property owners in Canada chose to sell their property privately, that is, without the services of a real estate agent. In this case the seller can avoid paying real estate agency fees, and sellers will typically give buyers a 5% discount on the list price to account for this. However, sellers may end up paying more in legal fees.

When purchasing property directly from an owner, a lawyer generally reviews Offers to Purchase, searches the title of properties, draws up mortgage documents, and tends to closing details on the purchase of property.

Private property sales are most commonly listed online in Canada, on sites such as Craiglist and Kijiji, or in local newspapers.


There are several provincial restrictions for non-residents of Canada purchasing land in Canada, particularly in agricultural areas.

Non-residents of Prince Edward Island are forbidden from owning more than five acres of land or 50 meters of waterfront without special permission.

Non-residents may only purchase two plots of agricultural or recreational land not exceeding a total of 20 acres in Alberta.

Foreigners may only purchase 10 acres of agricultural land in Saskatchewan.

Non-residents may not purchase more than 40 acres of agricultural land in Manitoba and must move to the province within two years of purchasing land.

Non-residents are not permitted to purchase agricultural land in Quebec without special permission. In this case, a non-resident is anyone who has lived in the province for less than 366 days within the 24 months preceding the real estate transaction.


Property Transfer or Purchase Tax and Land Transfer Fees

When purchasing a property, both non-Canadians and Canadians must pay a Property Transfer or Purchase Tax and Land Transfer Fees. These are calculated at 0.5-2% of the property’s total value. Generally, these fees are 1% of the first $200,000 of value, and 2% of the remainder.

This fee is not applicable in Alberta, Nova Scotia, or Saskatchewan. First time homebuyers who are permanent residents or citizens of Canada and have never owned a home anywhere else in the world are been exempt from this fee.

There are other criteria to qualify for this exemption. It is recommended to consult with a lawyer to see if you qualify.

Clearance Certificate

Average cost of $300-$1000, paid by the seller, for the arrangement of a clearance certificate.

Realtor’s Fees

Realtor’s fees are negotiable between 3% and 7% of a property’s market value. The seller pays these.

Realtors often charge 7% on the first $100,000 of value, and 3% on the remainder. The seller must also pay a Goods and Services Tax (GST) on this fee.

Lawyer’s Fees

Lawyer’s fees are approximately $500-$800, and vary by province and the complexity of the sale and type of property.

Appraisal Fee

A mortgage broker sometimes requires property appraisals. Appraisal fees are approximately $150-$250.

Survey Fee

Most mortgage brokers require surveys. If the seller does not have a survey, you must provide one at a cost of $150-$350.

Home Inspection Fee

This is the equivalent of a survey in the UK and other countries, and is carried out at the purchaser’s request, before final sale. Home inspection fees are approximately $450.

Property Insurance

This covers the replacement value of the structure of your home and its contents, and costs vary accordingly. Most mortgage brokers require that you purchase property insurance.

Service Charges

Some utility providers charge fees for hooking up new services, from $35-$200 per service.

Condominium (Strata) Fees

Condo fees are charged monthly or annually and cover building insurance, maintenance, amenities, and repairs. Condo fees range from $200-$5000, and vary from building to building and city to city.


Non-Canadians are subject to all the same fees and taxes as Canadians when purchasing real estate in Canada. However, in some jurisdictions, non-Canadians must pay higher land transfer taxes.

Property Tax

An owner of a property in Canada pays property tax. Property tax is the same for Canadians and non-Canadians, except in Prince Edward Island, which imposes higher property tax on anyone who is not a resident of the island (not just non-Canadians).

Income Tax

Non-residents of Canada pay tax on income received from sources in Canada. The type of tax paid, and the requirement to file income tax returns, depends on the type of income.

Non-residents renting property they own must pay a 25% withholding tax on rental income. This is usually taken off of the monthly rent.

Goods and Services Tax (GST)

GST is 5% payable on newly constructed properties. GST is often included in the quoted sales price.

Provincial Sales Tax (PST)

PST is 0-10% and is normally included in the quoted sales price.

Harmonized Sales Tax (HST)

HST is applicable on most goods and services in British Columbia, Ontario, New Brunswick, Newfoundland and Labrador, and Nova Scotia, including new homes. HST is also payable on any costs and fees associated with property purchase, including legal/notary fees, realtor commissions, renovations, etc.

Property Tax

Property tax is levied annually by municipalities, and varies across Canada. Property tax proceeds pay for municipal services such as waste collection, sewer and water systems, roads and highways, and snow removal. Property tax is generally 0.5-2.5% of a property’s value. A provincial assessment authority determines taxable property value.

Capital Gains Tax

Capital gains tax is not applicable on your principal residence in Canada.

Non-residents of Canada do not pay taxes or fees on the funds that they invest in real estate in Canada if these funds were earned outside of Canada.

Dual Taxation Treaties

Many countries, such as the U.S., have tax treaties with Canada that prevent you from being taxed in both Canada and your home country.

By Jess Gerrow, who traded city life in Canada for island life in the Mediterranean two years ago. She is a postgraduate marketing student, blogger, and freelance writer.