Canada is a beautiful country, boasting breathtaking mountains, countless lakes, and some of the best ski resorts in the world. Additionally, Canada has a stable economy, political and social stability, and an airport infrastructure increasingly covered by low cost airlines. This makes it a desirable country to have a second home or to invest in. It’s not surprising, then, that people from all over the world look to Canada for investment in real estate or simply to purchase a vacation home.

The buying process, however, could be very different from what you’re familiar with in your home country. So if you’re seriously considering purchasing a home in Canada familiarize yourself with the process and you’ll avoid headaches and unexpected surprises.

Choosing Your Location

Eastern Canada has generally better prices than the west. Of all the major metropolitan areas, Montreal has the lowest residential prices though they are now steadily rising. British Columbia, the westernmost province of Canada has a beautiful scenery, dotted by mountains, lakes, rivers, a comparatively temperate climate, and an endless amount of activities. These perks are offset by high housing prices especially around the Greater Vancouver Area.

Finding Your Property

 Once the region is selected you start your search the old fashioned - by driving around the area you’re interested in. You can also start your search online using Realtor.ca, Zillow.com, or Zolo.ca. A local real estate expert who specializes in the area, understands the local laws, ordinances and taxes you will need to be aware of, and a real estate lawyer to help you draft necessary legal documents will be invaluable. The real estate agent should also have experience dealing with foreigners looking to buy in Canada.

Familiarize Yourself With The Purchasing Process

Once you find a property you’re interested in then a property tour should be scheduled. If you're out of town a virtual tour can be arranged either through Skype, Facetime, Zoom, or by recording a walkthrough and sending it to you.

When you find the property you want it’s time to make an official offer. Your real estate representative will help prepare the Offer To Purchase. This offer will be presented to the seller along with a deposit of usually no more than 10% of the purchase price. This deposit tells the seller you’re a serious buyer but will be refunded to you if the sale falls through. The seller then will either accept, reject or make a counteroffer. Depending on the offer, and the state of the market, you may go a couple rounds of counter-offers before both of you agree on the final purchase price.

Once both parties agree on the purchase price a copy of the signed agreement will be presented to your real estate lawyer, or notary public in Quebec. The lawyer will then examine any sales conditions and set the closing date. The lawyer must be informed about who will be registered on the deed, whether it’s a person, a group, or a corporation. The lawyer will also ensure that the house has clean title, is free of liens, and that all property taxes are paid. Additionally, the lawyer will prepare a statement of adjustment which will confirm the selling price, the amount the buyer has to pay the seller, the balance of the down payment, and adjustments. Then a certified check for this total should be made payable to the lawyer in trust. Finally the lawyer pays the seller, registers the home in the buyer's name, provides a deed, and the keys to the new house.

Financing 

If you’re looking to buy a vacation home there’s a good chance you’ll be able to pay in cash. However, you also have the option to finance your purchase. There are many banks and other financial institutions that can help you finance your purchase but these loans will be more expensive for you than for a Canadian resident. You may have to pay a 35% downpayment on your property and you will have higher interest rates as well.

Taxes, Legal Fees, And Other Additional Costs

Be aware that laws and taxes can change significantly depending on the region of Canada in which you wish to purchase your vacation property. The two largest real estate markets have a foreign speculator tax. The Vancouver area has a 20% tax on foreign buyers, and the Golden Horseshoe Area around Toronto has a 15% tax. This tax was created in order to slow down foreign investors who were inflating affordable levels for the average citizen. British Columbia also has an additional tax on luxury houses valued over $3,000,000.

In most regions of Canada there’s also a Land Transfer Tax which is calculated between 0.5% and 2% of the property’s total value. Different regions have a different tax rate except for Alberta, rural Nova Scotia, and Saskatchewan which don’t have this tax. There is also a Goods And Service Tax of 5% on newly constructed and substantially renovated homes, though this tax is often included in the listing price of a property subject to it.  

In regards to real estate agents’ fee, the standard rate for a real estate agent is 7% on the first $100,000 Canadian Dollars on the sales price, and a 3% on the rest. Be aware that the seller is usually the one who pays such fees. The lawyer, or notary public, who reviews the Offer to Purchase and prepares all the closing details have their own costs as well. Each party is responsible for their own lawyer fees.

Laws change all the time so you should always have a well informed real estate professional who is up to date with them and has plenty of experience with foreign buyers. By keeping yourself well informed you will be able to realize your dream of owning your dream home in Canada.