Real Estate Investment

Property prices in Toronto and Mississauga are very affordable by international standards.

Toronto is considered to be the most active condominium market in North America. There are around 36,000 units under construction in Toronto area in the first quarter of 2009.

After taking into account a recent drop in the housing starts, Toronto condo market's future outlook seems bright. First time buyers and real estate investors (many from outside Canada) continue to flock to Downtown cores, close to corporate offices and amenities.

Secondly, surging gas prices provide another reason for residents to live in high-density city settings rather than in the far away suburbs. (Mississauga is Toronto’s closet suburb and just 40 minutes drive by car/ GO Train).

In Toronto, prime condo building prices start at $500 (resale condominiums) and go up to $1,000 per square foot (pre-construction condominiums) and even higher for the best buildings - which may include projects such as the Four Seasons residences, One Bloor Street and The Trump Tower.

The economic dominance of Toronto over other Canadian cities was confirmed recently by the Forbes magazine. Toronto is the only city in Canada to make it to Forbes Magazine's Top 10 Economically Powerful Cities (Aug 08). London was number one, followed by Hong Kong and New York. Other cities which made to the top 10 roster were Tokyo, Chicago, Seoul, Paris, Los Angeles and Shanghai.

Toronto offers a safe real estate investment haven for international investors looking for a second or third home in North America’s most diversified city.

Mississauga and Downtown Toronto's real estate investment comes from both domestic as well as international investors; many come from countries such as India, Iran, Pakistan, UK, UAE, China and Russia.

When comparing gross rental yield; i.e.; the landlord's return on his investment before taxes, maintenance fees and other costs expressed as a percentage of purchase price, Toronto ranks the best City in North America, as per the Global Property Guide's property investment ratings.

Tenant protection laws are strong, somewhat pro tenant in Ontario. However, the tenant selection and due diligence on part of the real estate agents can eliminate bad apples before entering into a tenancy contract.

There are many property management companies that can offer peace of mind to absentee property owners (international investors residing outside Canada). Normally, property management fees area approx. 6-10% of gross rental. Some property management companies even file non resident’s annual tax return for their rental income.

Some FAQs for Mississauga Toronto non-resident investors:

• What is the cost of living in Ontario?
• Can I apply for permanent residency?
• Are there any restrictions on home ownership for non-residents?
• As a non-resident can I work in Ontario?
• What types of real estate investments do you offer?
• What taxes are payable on the property purchase and at what rate?
• How much down payment do I need to pay?
• What other costs will I pay?
• How much annual property tax?
• What taxes will I pay if I plan to sell my property?
• Can I lease my property?
• What tax is levied on rental income?
• How easy is it to repatriate any gains or income from the property?
• What are the tax implications if I buy a property in a company name?
• Is there any legal protection for foreign investors?
• Do you know what the legal costs will amount to?
• How many days do I need to be in Toronto to buy an investment property?
• Can I buy property in my child’s name, if he/she is an international student in Canada?
   

What is the cost of living in Ontario? Relative to Western Europe, UAE and other oil rich Middle Eastern countries the cost of living in Ontario is lower. It is about the same as the United States. International visitors are pleasantly surprised at the cost of fresh produce in this people friendly and multi-cultural Toronto city.

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Can I apply for permanent residency? Yes, you can apply for permanent residency. There are a number of criteria to be met.

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Are there any restrictions on home ownership for non-residents? No, there are no restrictions. As a non-resident you may own a home in Ontario. Withholding tax is payable, however, on earned income (such as rent) or sale proceeds in accordance with the terms of the tax treaty between Canada and the respective non-resident country.

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As a non-resident can I work in Ontario? To work in Ontario you are required to have a Social Insurance Number (SIN). To find out more please visit the Government of Canada web site.

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What types of real estate investments do you offer? Amit can help you with two types of residential real estate investments in Downtown Toronto and Mississauga. Off-Plan property; to be ready in couple of months or years from the date of purchase, and resale property; ready to move in investment property bought for the purpose of rental income. Some investors have the opportunity to enjoy a beautiful holiday home when the property is not occupied, while watching its value appreciate at a steady pace. Depending on the individual investor's goals, each property can offer return on investment (ROI) and long term growth potential.

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What taxes are payable on the property purchase and at what rate? Newly constructed homes are subject to a federal Goods and Services Tax (GST). If the property will be used by you as the primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price; otherwise, GST at the full rate (presently 5%) is payable. Land transfer tax and Toronto Land Transfer Tax (for Toronto City only) is also payable when buying property in Ontario.

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How much down payment do I need to pay? As a non resident of Canada, you can be asked to pay more than 35 percent of purchase price as down payment. Every bank has its own set of policies. Its always prudent to speak to the lending institution and get pre-approved for mortgage. The balance of purchase price can be borrowed from financial institution against the mortgage of your property. The rate to borrow is same as any other Canadian or permanent resident.

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What other costs will I pay? Apart for your monthly mortgage payments, you are liable to pay monthly condominium fees (generally around $0.50 cents per square feet, say for a 1000 sq ft apartment, you would pay $500.00 per month), property management costs; if you are an absentee owner, and your property taxes. Most of the utilities are included in your condominium fees, and/or are payable by the tenant, if applicable.

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How much are annual property tax? Municipal and school tax is based on a Mill Rate currently (2008) estimated at 0.8749 and 1.0347 in Downtown Toronto and Mississauga respectively.

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What taxes will I pay if I plan to sell my property? If the property was used as a principal residence, the owners are exempt from payment of capital tax. If the owner is a non-resident, the sale proceeds will be subject to withholding tax. You should consult with your tax advisor and lawyer for exact details of these taxes.

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Can I lease my property? Yes. You may opt to lease your condo to a qualified tenant; someone with good credit, job history and references, for one year or shorter term.

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What tax is levied on rental income? Rental income is taxed under Canadian law. You should consult with your tax advisor for the exact amounts.

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How easy is it to repatriate any gains or income from the property? Providing that any withholding tax and certificates are remitted to Revenue Canada there are no other requirements needed to satisfy the tax authorities.

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What are the tax implications if I buy a property in a company name? A non-resident corporation must file a corporate income tax return with Revenue Canada if the corporation carried out business in Canada or disposed of a taxable Canadian property in the tax year. You should consult with your tax advisor and lawyer for exact details.

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Is there any legal protection for foreign investors? Foreign investors are provided the same legal protection as any Canadian citizen.

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Do you know what the legal costs will amount to? Legal costs to buy an investment property in Toronto Mississauga, including land transfer taxes, lawyer fees and other closing costs can amount to three to five percent of purchase price.

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How many days do I need to be in Toronto to buy an investment property? If working with an experienced Realtor, the process can be summed up in three easy steps. First is your mortgage approval (say one week) followed with transfer of funds, as per FINTRAC prevailing laws. Second step, is finding the property. Depending upon your investment goals and neighbourhood choice, it can take about one week to get you the right property. The last step, is meeting with a real estate lawyer, an accountant and a property management company, this can be take another one or two days. Your mortgage approval process (as above) can start even before your arrive in Canada.

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Can I buy property in my child's name, if he/she is an international student studying in Canada? Yes, you can buy a property in your child's name if he/ she is 18 years or older. You may also buy a property in joint names, subject to bank’s approval. If you/ your child is a permanent resident of Canada, you can qualify for first time buyer rebates, subject to other conditions.

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