Toronto is known as the 4th largest city in North America. Considering Toronto’s significant advancement as a world-class city and as the economic hub of Canada, it is not far-fetched to see the growing interest of Americans in buying property in Toronto. Also, many big American tech companies have opened new offices in Canada recently, which has led to more and more enthusiastic Americans entering the Toronto real estate market. Here are the most important tips that American home buyers must know before investing in Toronto.
1. Is it important to have citizenship or permanent residency?
When American home buyers plan to buy a property in Toronto, there is no need to have a Canadian passport. And they don’t need to be a permanent resident of Canada to buy a house in Toronto. The key point is that they just must pay15% of the purchase price as a Non-Resident Speculation tax at closing. You should also know that home ownership does not mean that you will have any residency or immigration rights.
There are conditions for those who are eligible to get back the 15% Non-resident speculation tax. You can contact us for more details!
Related articles: Home buyers most frequently asked questions
2. Investment in Toronto real estate market
Within the last 25 years, Toronto’s real estate values have been growing and many of the home and condo buyers and investors have received an incredible profit as well. As an American home buyer who has been transferred to the Toronto office and wants to buy a house in Toronto, you must know that Canada has made an official order allowing more than 440,000 immigrants a year into the country. It means this will push property values to increase and subsequently lead to more developments in future.
There are generally two ways to buy a property: 1) pay in cash, or 2) get a mortgage from a Canadian bank or lender. The important point for getting a mortgage for non-residents of Canada is that the Canadian banks need a minimum of 35% downpayment. Before buying a home and getting a mortgage, this amount of downpayment should be in a Canadian bank for a certain period of at least 30 days ( it might be different from bank to bank).
The good news is that Americans can have access to the same mortgage interest rates as Canadian residents. But as an American home buyer, you must come to Canada first and open a Canadian bank account. Because in order to get a mortgage, the bank should have your credit references, confirmation of income, US credit check and financial qualifications to pay your mortgage.
Read More:Mortgage as a Foreign Buyer In Canada
4. Who are you dealing with?
From the very first step up to the closing, an American home buyer is going to deal with these people to buy a house in Toronto: 1) A Top Toronto realtor who represents you as a Buyer; 2) A home inspector to check the house before the final negotiation; 3) A real estate lawyer to make all the closing arrangements; 4) A lender institution or bank to give you a mortgage (Unless you are purchasing all in cash); and 5) An insurance broker, because if you don’t have related information and experience for home insurance in Toronto, it can be tricky!
The important thing you should consider is that there are no escrow companies in Canada. So, the real estate brokerage will keep the deposits and the lawyer will transfer the money.
Related articles: How much does it cost to buy a condo in Toronto?
5. House hunting and timeline
After you clarify the mortgage bank and make sure about the financial aspect, you can happily begin your home search. There are three ways to search for a house in Canada. The first way is to search online. The difference between Canada and US listings is that those houses that are coming soon to the market won’t be listed.
The problem for American home buyers probably would be privacy legislation, which restricts sharing the public information. It means that unlike most of the US, the information about sold price and tax history are not publicly available for house hunters in Canada. But the advantage of searching for a house online is that you don’t need to be in Canada. You can see the available video of the house or ask for Skype tours of properties you are interested in.
The second method for house hunting in Toronto is using automatic search results via Email, which can be a very effective method. Match your search with your specific preferences/needs. Then you will receive new listings within your personal parameters daily. If you are in Canada, you can also house hunt in person. This will also help you visit Toronto and really experience Canada!
6. Land of taxes
When you buy a property in Canada, prepare yourself to pay for Land Transfer Taxes, which should be paid when you take possession of the property; Municipal Property Taxes every year; and Capital Gain Taxes when you sell.
Read More: Important Things to Do After Buying a House
7. Canadian lifestyle
Maybe one of the most prominent differences between Toronto and NYC would be the fact that the further away from downtown Toronto, the more affordable the homes become. This means that the price of the house in the suburbs is lower. However, their similarity is that Toronto’s seasons almost look like NYC. So in the hot summer days, Torontonians run away and go to cottage country and enjoy the fresh air near many lakes of Ontario!