Toronto Real Estate

Yes, foreigners can purchase property in Toronto. However, as of January 1, 2023, Canada enacted a law prohibiting foreigners, except for immigrants and permanent residents, from acquiring residential properties for two years to address housing affordability concerns.

Yes, property transactions in Toronto are subject to several taxes:

• Land Transfer Tax (LTT): Ontario imposes a land transfer tax on property purchases. Additionally, the City of Toronto has its own municipal land transfer tax. Both are calculated as a percentage of the purchase price.  

• Non-Resident Speculation Tax (NRST): Non-Canadian citizens and non-permanent residents buying property in the Greater Toronto Area must pay a 25% tax on closing.

Rental income earned in Toronto is subject to Canadian income tax. Non-resident property owners must remit 25% of the gross rental income to the Canada Revenue Agency (CRA). Alternatively, non-residents can elect to pay tax on the net rental income by filing a Section 216 return, which may result in a lower tax liability.

Yes, non-residents can obtain mortgages in Toronto. Typically, lenders may require a down payment of at least 35% of the property’s value. Interest rates might be higher for non-residents compared to Canadian citizens or permanent residents. It’s advisable to consult with a mortgage broker familiar with non-resident financing.  

Non-Resident Mortgages in Toronto

Eligibility

• Nationality: Most nationalities are eligible, but mortgage policies vary by lender.

• Income: Proof of stable income is required. Lenders may require a minimum down payment of 35% of the property’s value for non-residents.

• Age: Applicants must typically be between 18 and 65 years old.

Types of Mortgages

• Fixed Rate: The interest rate remains constant for a specified period, usually 1 to 10 years.

• Variable Rate: The interest rate fluctuates based on the Bank of Canada prime rate.

Loan-to-Value (LTV) Ratios for Non-Residents

• Typically, a maximum of 65% financing is available, meaning non-residents need to provide at least a 35% down payment.

Required Documents

• Passport and Visa Copies: Identification and residency documents.

• Proof of Address: Utility bills, rental agreements, or bank statements from the home country.

• Bank Statements: Usually 6–12 months of statements to show financial stability.

• Proof of Income: Salary slips, an employment letter, or audited financials for self-employed individuals.

• Credit Report: A credit history report from the applicant’s home country (if available).

** Please note that banking regulations and lending criteria changes from time to time so please make sure to consult a mortgage specialist for your specific circumstance. We have vetted experts that we work with that we would be happy to recommend.

In Toronto, the term "escrow" is not commonly used in real estate transactions. Instead, funds are held in a Lawyer's Trust Account throughout the process. For pre-construction projects, buyers typically provide deposits according to a schedule outlined in the purchase agreement. These funds are held in trust by the developer’s lawyer until specific project milestones are achieved.

Delays in pre-construction projects can occur due to various factors. The purchase agreement should outline the developer’s obligations and the buyer’s rights in case of delays. It’s crucial to review these terms carefully and consult with a real estate lawyer to understand your options, which may include extending the closing date or, in some cases, terminating the agreement.

Maintenance fees, also known as condo fees, are monthly payments made by condominium owners to cover the costs of building maintenance, amenities, and other shared expenses. These fees vary depending on the building’s amenities, age, and size. It’s essential to review the condominium’s budget and financial statements to understand what the fees cover and any potential increases.

Purchasing a pre-construction property involves several steps:

• Reservation Agreement: A completed worksheet, along with a copy of a government-issued ID (excluding health cards, but including a passport or driver’s license), and a deposit to reserve a unit are required.

• Purchase Agreement: Sign a formal agreement outlining terms, deposit structure, and timelines.

• Cooling-Off Period: In Ontario, buyers have a 10-day cooling-off period to reconsider their purchase without penalty.

• Deposit Payments: Make scheduled deposit payments as outlined in the agreement.

• Interim Occupancy: Once the unit is habitable but before the building’s registration, buyers may take occupancy and pay an occupancy fee.

• Final Closing: Occurs when the condominium is registered, and ownership is officially transferred.

Yes, selling a pre-construction property before completion is known as an “assignment.” This process involves transferring your rights and obligations under the original purchase agreement to a new buyer. However, not all developers permit assignments, and there may be fees involved. It’s essential to review your purchase agreement and consult with a real estate lawyer before proceeding.  

When purchasing a resale property in Toronto, the following documents are typically required:

• Agreement of Purchase and Sale (APS): The contract outlining the terms of the purchase.

• Mortgage Approval: Confirmation of financing from your lender.

• Status Certificate (for condos): Provides information about the condominium corporation’s financial and legal status.

• Title Search: Conducted by your lawyer to ensure the property’s title is clear of any encumbrances.

• Home Inspection Report: An assessment of the property’s condition.

• Identification: Government-issued ID for verification.