Country Guides Country Guide: Canada

Date Published:

29/05/2008

Buying a property in Canada is a relatively straightforward process, but always ensure you appoint a lawyer to look after your interests. The amount of purchase tax and annual property taxes payable vary from state to state. Mike Coyle, sales director for Premier Resorts, explains what the legal process and purchase costs are associated with buying a property at Le Grand Lodge,

Buying With A Mortgage

1. The reservation fee / deposit of £2,000 is payable upon execution of the reservation agreement; it becomes non-refundable upon an on-site visit or at signing (in which case it is applied to the purchase price).

2. A 25 per cent deposit is payable within 14 days of the return to the UK and is applied against the Purchase Price at closing. Thereafter there will be stage payments.

3. The disbursement by the purchaser of the purchase price at closing generally will include any amount not covered by earlier deposit(s) or by the mortgage financing obtained.

4. The balance of the purchase price is payable upon granting of the mortgage with a final time limit determined by how quickly the lender can act.

Non-Resident Mortgages

'Non-residents may apply for a mortgage (subject to status) with Caisse Populaire Desjardins of Mont-Tremblant,' says Coyle. 'The Caisse Populaire policy for non-residents is that financing is available to the extent of 75 per cent on the lesser of the purchase price or the certified evaluation (for Units up to $400,000); for Units having a purchase price exceeding $400,000, financing is available to the extent of 75 per cent on the first $250,000 and 60 per cent on the excess; for any financing above the 75 per cent threshold, the Caisse Populaire requires first ranking security on assets in the Province of Quebec.'

Purchase Fees and Taxes

'A ‘welcome tax’ is applied as follows,' says Coyle.

1. The land transfer duties are 0.5 per cent on the first CAD$50,000 plus 1 per cent on the additional amounts between CAD$50,001 and $250,000 plus 1.5 per cent on the excess over CAD$250,000.

2. Notarial fees generally vary between CAD$1,700 (purchase without mortgage and without proxy/power of attorney) to CAD$2,700 (purchase with a mortgage and power of attorney) and disbursements and miscellaneous fees are approximately CAD$1,200 to $1,300.

'Additionally, a 7 per cent Federal sales tax and 7.5 per cent Quebec Provincial sales tax (applied to the subject amount together with the Federal Sales Tax) upon purchase of a unit are applied. However, the filing of prescribed election forms could eliminate requirement to pay said tax.'

'Sales tax will be payable on the purchase of the furniture and fixtures. However, as mentioned above, an individual will be able to obtain a tax refund upon filing of prescribed sales tax returns.'

'It is recommended that you retain the services of a tax consultant as soon as a preliminary agreement is signed in order that the tax registrations are completed before the closing. The notary usually confirms the registration numbers with the specialist at the time of closing (thus avoiding payment of the taxes on the real estate portion of the purchase).'

The views represented in this article are those of the author and not of Channel 4. The purpose of the article is to provide general information only and does not constitute financial, investment, legal or other advice.You should not rely on any information provided in this article and you should always seek out independent professional advice relevant to your own particular circumstances.

For comprehensive advice on buying and selling in Canada, visit APlaceInTheSun.com