Valuable Advice For US Buyers Purchasing Toronto Real Estate
Are you an American thinking about moving to Toronto Canada?
You do not need to be a Canadian citizen to buy property in Toronto. There are no restrictions on US residents owning property in Toronto.
With the Canadian dollar worth less than .75 cents US, now is a great time to invest in the Toronto real estate market but there are a few things to be aware of before you start your property search.
Understanding Canadian Taxes While there are no additional taxes or restrictions for US buyers purchasing real estate in Toronto there can be tax implications for US owners when they sell property in Toronto. A US seller may be subject to a non-resident withholding tax of 25% on the sale price of the property. Further details can be found on the Canada Revenue Agency website. Consult with your own Canadian tax accountant to fully understand the Canadian tax rules and implications of selling a property in Toronto as a foreign owner.
All buyers, local or from the United States, who purchase real estate in Toronto are required to pay two Land Transfer Taxes (LTT) - one to the province of Ontario and one to the City of Toronto. A purchase of a $1M home or condo in Toronto translates into approximately $32,200 owing in Land Transfer Tax. A simple way to determine the approximate amount of funds you will need to set aside for land transfer tax is to use this Land Transfer Tax Calculator.
Have Your Funds Seasoned In A Canadian Bank The Toronto real estate market is fast paced with properties selling quickly. For peace of mind be prepared by having the funds in Canada and ready to go. Sudden fluctuations in currency exchange rates and delays in money transferring from the United States can negatively affect the outcome of your home purchase.
When making an offer to purchase property in Toronto you will be required to present a deposit of 5%-10% of the purchase price in the form of a certified cheque, bank draft or money order in Canadian funds from a Canadian bank.
Canada is known for having the safest banking systems in the world and a US citizen can easily open a bank account at any Canadian bank by making a personal visit to the bank branch and providing applicable photo identification.
How The Toronto Real Estate Market Works Toronto REALTORS® operate under an organized system called the MLS or the Multiple Listing Service. That means that when a Seller retains a licensed realtor to sell their condo or house, the Seller’s agent posts the listing on the MLS database. It indicates to all real estate agents in Toronto that this property is for sale and that they will co-operate with other real estate agents from other real estate companies if they bring a buyer to the property. If it results in the sale of the property, the buyer’s agent is compensated through the listing broker for commission.
For the consumer, this eliminates the need to go from agent to agent or from brokerage to brokerage to see what listings they have because all that info is shared in one place on the MLS database. As real estate agents we are all looking at the same database of property information on the MLS. It is also beneficial for Sellers as their property is exposed to over 40,000 agents in the Greater Toronto Area as opposed to have it only sold exclusively through one real estate company or brokerage.
The Toronto real estate market moves quickly with good properties selling right away on the MLS. To help you stay ahead of the market, a Buyer’s agent can set up a customized home search for you and send you new property listings from the MLS as soon as they come up for sale. Retaining an agent to help you in the buying of your Toronto home or condo does not cost you anything as their commission is paid by the Seller through the Listing Brokerage.
Obviously buying a Toronto home or condo is not just about having an agent send you listings. A good real estate agent has many years experience in the Toronto neighbourhoods you are considering and can help you analyze the info so you can make a well informed purchase that will appreciate over time.