Spouses with different residency statuses who want to purchase a home together

Posted on December 14, 2023December 14, 2023 by markogel@gmail.com

(Dec 14, 2023)

Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!

As per the current legislation in British Columbia, if you plan to purchase a property and are not a Canadian citizen, Permanent Resident, or Provincial Nominee, you’ll be subject to a Foreign Buyer Tax of 20% of the purchase price due at the time of completion. For instance, if you, as a work permit holder, buy an $800,000 property in Vancouver, you’d need to pay $160,000 in Foreign Buyer Tax. However, becoming a Permanent Resident exempts you from this tax. But what if you’re in a marital or common-law relationship with one partner being a Permanent Resident and the other a work-permit holder (mixed-immigration-status couple)? If you both buy a home, would you still have to pay the Foreign Buyer Tax?

The answer is yes, but an opportunity exists to minimize the tax (potentially as low as 1%). The process involves registering you, your spouse (if applicable), and your bank (if financing the purchase) on the land title upon buying a home. You can then allocate a specific ownership proportion between you and your spouse. Let’s now return to the mixed-immigration-status couple, where one is a Permanent Resident and the other a work permit holder, the latter, being liable for the Foreign Buyer Tax, can minimize their tax payable by assigning a minimal ownership share. For instance, if the Work Permit holder is registered as 1%, they would only pay 1% of the tax on a $1M purchase, reducing it from $160,000 to $1,600!

Here’s the catch—the non-Canadian spouse must meet all of the following conditions: (i) they must be married or common-law for at least 2 years (with verification via documents such as a marriage certificate, lease agreement, utilities statement, or bank statement, etc), (ii) the Work Permit holder’s down payment cannot exceed their registered ownership share, and (iii) they must comply with the Prohibition on the Purchase of Residential Property by Non-Canadians Act, holding a valid work permit with 183 days or more of validity at the time of purchase.

What about mortgage qualification?

Regardless of whether you hold temporary or permanent residency status, there are numerous mortgage qualification programs tailored for newcomers to Canada within the Canadian market. The key challenge lies in identifying a lender whose eligibility criteria align with your specific application profile. These New-to-Canada mortgage programs vary widely from one lender to another, underscoring the importance of connecting with a multi-offering mortgage broker rather than relying on a single-offer bank representative. Submitting a single application through a mortgage broker grants access to multiple lenders, enhancing your approval prospects. Moreover, the competitive bidding process ensures favourable rates and diverse product offerings. Marko Gelo specializes in mortgages for new Canadians; call him right now to discuss your goals or Click Here to schedule a call that is convenient to you.

Disclaimer: The information above is intended to raise awareness of possibilities, provided all conditions are met. If you find that you meet the criteria discussed, the next steps should be to begin the mortgage preQualification process and verify further with your real estate lawyer regarding your immigration status as it pertains to the Foreign Buyer Tax and the Prohibition on the Purchase of Residential Property by Non-Canadians Act . For a complete reference to the BC Foreign Buyer Tax, Click Here to be redirected to the official webpage of the British Columbia Provincial Government.

Feel like a quick chat about any of the above? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!

Contact Marko, he’s a Mortgage Broker!

604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

403-606-3751 cell only | Calgary (Click Here to schedule a call with Marko!)

Call Marko via WhatsApp!

Email: gelo.m@mortgagecentre.com

Facebook

@markogelo (Twitter)

Foreign Buyer Tax, Prohibition Act, and Mortgage Qualification

Posted on December 2, 2023December 2, 2023 by markogel@gmail.com

(Dec 2, 2023)

Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!

In the ever-evolving landscape of real estate in Canada, non-Canadian residents find themselves in a complex web of regulations that significantly impact their ability to purchase a property. At the forefront of these regulations are two pivotal legislative measures: the Foreign Buyer Tax in British Columbia and Ontario, and the nationwide Prohibition on the Purchase of Residential Property by Non-Canadians Act. While the Prohibition is poised to conclude on December 31, 2024, the foreign buyer tax (at the moment) has no set expiry date. These two key policies act as barriers, preventing many well-intentioned non-Canadians from realizing their dream of establishing roots in Canada through property ownership.

Here is a summary of the two key regulations:

The Prohibition on the Purchase of Residential Property by Non-Canadians Act: as of March 27, 2023, work permit holders are allowed to purchase residential property in Canada provided that they hold a work permit with at least 183 days of validity, or more, remaining on the permit, and have not purchased more than one residential property. 183 days must be remaining on the permit on the completion date of the property.
The Foreign Buyer Tax (BC) or Non-Resident Speculation Tax (Ontario): Unless you are a Canadian citizen, Permanent Resident or Provincial Nominee you are subject to an additional land transfer tax of 25% in Ontario, and 20% in British Columbia. Click on the following links to see if you are eligible for exemptions: Foreign Buyer Tax Exemptions in BC, and Non-Resident Speculation Tax Exemptions in Ontario. The province of Alberta (and all other remaining provinces and territories) has not mandated any foreign buyer tax.

Can non-Canadians qualify for mortgages in Canada?

Absolutely! Although non-Canadians are subject to the hefty foreign buyer tax in BC and Ontario, work permit holders and permanent residents can otherwise purchase in the rest of Canada and qualify for a mortgage with as little as 5% down. As qualification programs vary with lenders and insurers, it is best to proceed with a formal pre-qualification to determine your precise qualification scope. Click Here to begin your free preQualification with Marko Gelo.

In Summary

In the dynamic realm of Canadian real estate, non-Canadian residents continue to grapple with the multitude of regulations that impact property acquisition. The forefront of these rules includes the Foreign Buyer Tax in British Columbia and Ontario, and the nationwide Prohibition on the Purchase of Residential Property by Non-Canadians Act, with the latter set to conclude on December 31, 2024. Summarizing the key regulations, the Prohibition Act outlines conditions for work permit holders, while the Foreign Buyer Tax presents additional levies in Ontario and BC. Notably, non-Canadians can still qualify for mortgages in Canada, subject to region-specific tax implications.

Make sense? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!

Contact Marko, he’s a Mortgage Broker!

604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

403-606-3751 cell only | Calgary (Click Here to schedule a call with Marko!)

Call Marko via WhatsApp!

Email: gelo.m@mortgagecentre.com

Facebook

@markogelo (Twitter)

Exemptions and Revisions: How the Foreign Buyer Ban Affects Temporary Residents

Posted on January 8, 2023September 12, 2023 by markogel@gmail.com

(Sept 12, 2023)

The Prohibition on the Purchase of Residential Property by Non-Canadians Act (also known as the Foreign Ban) came into effect on Jan 1, 2023. With the final release of policy details and regulations unfolding just days before the new year, many Temporary Residents found themselves scrambling over the holidays wondering how the new legislation affects them. Since then there have been some notable revisions. The most striking changes were exemptions pertaining to work and study permit holders:

Temporary residents working in Canada are exempt, if they:

hold a valid work permit or are authorized to work in Canada, and
have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and
have not previously purchased a residential property in Canada while the prohibition was in effect

Temporary residents studying in Canada are exempt, if they:

are enrolled in a program of authorized study at a designated learning institution as defined in the Immigration and Refugee Protection Regulations, and
have filed income tax returns for each of the 5 taxation years preceding the year in which the purchase was made, and
have been physically present in Canada for a minimum of 244 days in each of the 5 calendar years preceding the year in which the purchase was made, and
have not previously purchased a residential property in Canada while prohibition is in effect, and
purchase a property for a price not exceeding $500,000

Here are some other key points and notable exemptions of the Act:

the Act came into force on January 1, 2023 and will remain in effect for a period of 2 years,
the Act doesn’t apply to non-Canadians who entered into binding offers of purchase and sale before January 1, 2023 even if the sale is finalized during the prohibition period,
the Act also applies to corporations and entities formed under the laws of Canada or a province, not listed on a stock exchange in Canada and controlled by someone who is a non-Canadian,
the Act doesn’t apply to non-Canadian spouses and common-law partners, if they purchase residential property in Canada with their spouse or common-law partner who is a: Canadian citizen, person registered under the Indian Act, permanent resident, or non-Canadian for whom prohibition does not apply
Situations where the Act doesn’t apply:
- when a non-Canadian acquires an interest in a residential property becuase of a divorce, separation, gift, or death
- when a non-Canadian rents a dwelling unit for the purpose of occupying the dwelling unit – in other words, a non-Canadian who is renting and occupying the dwelling unit does not constitute a purchase,
- when a non-Canadian purchases residential property for the purposes of development,
- when a creditor exercises a security interest or secured right, such as the seizure and foreclosure of a residential property

If you are a Permanent Resident you are NOT affected by Foreign Buyer Tax and the Foreign Ban.

Click Here for expanded details of the Act as interpreted by the Canada Housing and Mortgage Corporation (CMHC).

If you are a Temporary Resident and wondering if you are eligible for any of the above exemptions, call or text Marko Gelo directly at 604-800-9593 cell/text, or schedule a phone call in the future with Marko at your convenience.