There is no limitation for American citizens to buy a house in Canada, but they should know that the rules would be different about taxes or payments for non-Canadian residents. There are some important tips that all the Americans who decided to buy a house in Toronto must know. First, it is recommended to hire a professional Toronto real estate agent to help them better understand all the related rules and regulations. Then, you can read the following tips to successfully find your ideal house in Toronto real estate market.
Is it necessary to be a citizen or permanent resident?
As an American homebuyer in Toronto, you don’t need to be a permanent resident of Canada. But you should also know that this ownership cannot give you any residency or immigration rights. The important tip you should know is that as an American, you need to pay 15% of the purchase price as a Non-Resident Speculation tax at closing when you want to buy a property in Toronto.
Who is involved in the process of buying a house in Toronto?
In Canada, there are no escrow companies. In other words, the real estate brokerage is the one who holds the deposits and your lawyer manage everything related to fund transfer. All the parties involved in the house-buying process in Toronto include:
- A licensed realtor to represent you as a buyer and certainly lead you through the entire process of buying a house in Toronto
- A real estate lawyer to perfectly manage all the closing arrangement
- A home inspector to find out if the house needs any serious repairment or renovation
- A lender institute for downpayment and mortgage, unless you want to buy in cash
- An insurance broker to help you with home insurance in Toronto, especially if you don’t want to live in the home yourself.
In Canada, you can receive financing from Canadian Banks as either a 20% downpayment or 35% of the purchase of a property. Americans are also eligible to receive the same mortgage interest rates as Canadian residents. But you need to be qualified for the mortgage, which means you will need confirmation of income, credit references, US credit check, so forth.
For this reason, you should be present in Canada and open a Canadian bank account. Because Canadian banks ask U.S. citizens to put at least a 35% downpayment for the purchase price. This specific amount of money needs to be in your Canadian bank account for a while before you can use it to buy a property in Toronto.
How much does it cost an American to buy a house in Toronto?
When you decide to buy a Toronto house, you should pay for taxes plus closing costs. Here is a brief list of all need to pay:
- Land Transfer Taxes to take possession of the property
- Municipal Property Taxes (annually), it is different in each city
- Capital Gain Taxes when you sell
- Mortgage Broker Commission
- Legal Fees (depends on the purchase price and lawyer)
- Property Appraisal
- Title Insurance to describe your legal ownership of a property and its land
- Home Inspection Fee
- Balance of Purchase Price
- Registration fees, it is varied by document, property type, region, and province
Home Buying Timeline
After clarifying the financing and deposit amount with your Canadian bank and mortgage broker, it is time to start the home search. You can search Toronto houses even from the US. But you should know in Canada, the price and tax history information are not publicly available, so they are not searchable like most parts of the US. You should better do the necessary due diligence upfront. Then, considering the Toronto real estate market and the best time to buy a home in Toronto, you can search for a proper house based on your personal preferences. There’s no specific time span for this phase, it may take a few weeks to a few months. After you find your ideal house, you will make a successful offer to purchase the property. And after all the negotiations, closing and transferring the ownership and keys will be 60-90 days after that.
My advice to Americans who want to buy a Toronto house is that explore more about the Toronto lifestyle before buying. Try to get to know the neighborhoods and the different types of houses available in Toronto. See you want to live in downtown, midtown or suburbs of Toronto.