Real estate in Canada: worth buying and why
Canada is among the countries where the standard of living is high and property prices are still relatively low. Therefore, it is considered one of the most attractive countries for real estate investment. Prices for houses, apartments and offices here are growing almost constantly, ahead of inflation. And such dynamics has been observed for the past 10-15 years.
Today, property prices in Canada are growing at an average rate of 11% per year. Thus, the purchase of an inexpensive apartment in the future will bring significant profits during its subsequent sale. However, do not forget that the difference in price for resale will be taxed on income.
What brokers say
In the event of an increase in the value of real estate in the process of its resale, a foreigner must pay a capital gain tax. For its calculation, 50% of the difference between the price of the initial purchase and subsequent sale is taken, minus associated costs (for purchase and sale). And from this amount you need to pay tax at the usual income tax rates for residents of Canada.
Capital gain is not paid if the property owner is a resident of Canada, and if this property was his primary residence. It is difficult to say how much this fact affects the overall profitability of the transaction and the attractiveness of Canadian real estate as an object for investment. There is no definite answer here, since the schemes for investing in real estate in Canada can be very different, the types of real estate are different, the costs and growth in value are different, there can also be other income / expenses, etc. For more accurate answers, you will need to contact a Canadian accountant
Profits can also be obtained from the rental property purchased. Firstly, for this it is absolutely not necessary to go to Canada, just write a power of attorney to represent your interests in the name of a resident of the country. The cost of renting one-bedroom apartments in Vancouver, for example, averages at least $ 1,500 per month.
Secondly, Canada has a very large influx of immigrants – annually about 300 thousand people arrive there for permanent residence. And all of them, one way or another, are thinking about renting, and then buying an apartment in Canada.
It is also worth noting that not only residents, but also foreigners can own real estate in Canada. They can even get a mortgage, however, on slightly less favorable terms than residents.
What brokers say
When buying property in Canada, the owner incurs the following costs:
Buying an apartment in a condominium: 1) Property tax – approximately 0.7% of the total cost; 2) Monthly fees condo fee – the size depends on the area, the building itself, its coolness, age. For example, for a 1-bedroom condo these condo fees can be of the order of $ 200- $ 350 CAD per month, for a 2-bedroom condo – $ 350- $ 450 per month; 3) Insurance ($ 30-50 per month); 4) Utility payments (if they are not included in the condo fee) – about $ 45- $ 50 CAD for each type (Internet, electricity, gas).
Buying a detached house or freehold townhouse: 1) Property tax; 2) Insurance; 3) Utility bills. Moreover, if the property is rented out, then the owner does NOT pay utility bills from the listed list.
How much is real estate in Canada: offers and prices
You can invest in residential real estate (apartments in condominiums, townhouses, separate houses), and in commercial (offices and trading floors). Apart are investment projects (building a hotel, for example) that require large investments, but which bring much greater profit.
When compared with the United States, it is more profitable to buy in Canada.
Real estate in suburban areas and small towns in the USA and Canada does not differ significantly in value. In the central areas of the city, the difference is a little more noticeable, but it all depends on which American metropolis to compare with. However, the main difference between American and Canadian real estate is not in price, but in the constant increase in housing prices in Canada and the inexhaustible influx of immigrants. Entering Canada is much easier than entering the United States, so renting a house there or reselling it after a few years is a very lucrative business.