Buying and selling by non-resident

Real Estate Transactions with a Non-Resident of Canada

Montreal is very popular with European (particularly French), American and overseas investors. However, buying or selling a condominium, income property or any other building type entails various tax considerations that a foreign buyer or seller should be aware of. Born in Europe, Jean-Patrice Bourguet, a real estate broker at Via Capitale de Mont-Royal in Montreal, represents many foreign buyers and sellers and has therefore been in the position to undertake the sale of several properties owned by non-residents. Although the following text can apply to most cases of real estate transactions involving a foreign buyer (non-resident) or seller (non-resident) who wishes to purchase or sell in Montreal, there are always exceptions. Therefore, it is best to consult an experienced professional in the field relating to the type of potential purchase or sale, like Jean-Patrice. He is a professional Montreal real estate broker (a profession formerly known as “real estate agent”) who specializes in transactions with non-residents. Indeed, he represents many European buyers and sellers and is in a position to help you. Jean-Patrice works exclusively with notaries and accountants specializing in this field. In order to better understand the consequences of such a transaction, consider the case of (I) the sale of a building in Montreal by a European, and (II) the acquisition of a property in Montreal by a European.

(I) SALE BY A FRENCH PERSON IN MONTREAL

A non-resident who disposes of taxable Canadian property must obtain a Certificate of Conformity issued by the relevant tax authorities. A property located in Montreal (Quebec) is thus considered taxable Canadian property. Therefore, a certificate of Compliance Related to the Disposition of Taxable Canadian Property by a non-resident is required from the Ministère du Revenu du Québec in addition to one obtained from the Canadian Revenue Agency. Thus, a non-resident vendor must, within ten (10) days of the date the deed of sale is signed, produce proof of having made requests to the both the Quebec and Canadian Governments for the Certificates of Compliance for Non-Residents. Failure to meet this deadline will result in a fine that could reach a total of $2 500.00. To ensure legal requirements for obtaining these certificates are respected, the notary overseeing the transaction must therefore retain in his trust account the necessary amounts to cover both the sale price and the tax amounts relevant to the transaction concerned. Only once both levels of government have received and audited these taxes can the certificates be issued. When they have been delivered to the notary, he or she can then release the withheld funds to the seller. In conclusion, once a promise to purchase has been finalized (with all conditions fulfilled), the concerned non-resident vendor shall promptly notify the buyer’s notary of his status (as soon as possible before the closing date) so that the notary in question can work with a specialized accountant in the field to prepare the applications needed for the necessary certificates.

(II) PURCHASE OF A PROPERTY BY A FRENCH PERSON IN MONTREAL

When a non-resident French person purchases property in Montreal, the procedure is not the same as above (unless the property is for agricultural use). He or she does not need to obtain any government authorization to buy property in Quebec. For example, several French people bought a building in Montreal as either a place of residence or for investment purposes. Jean-Patrice Bourguet, real estate broker for Via Capitale du Mont-Royal in Montreal knows the mortgage brokers and financial institutions that will provide favourable financing conditions to their European customers. On this subject, it is important to consider a down-payment of 35% of the purchase price.Because a French buyer is potentially a non-resident vendor, there are strategies that can be implemented to avoid future taxation. And if, as in some cases, there is no possible way his French clients can avoid future capital gains and are therefore nervous about being taxed as a non-resident when they sell, Jean-Patrice reminds them that if there is tax to be paid on the capital gains upon resale, it is because a profit has been made! The current real estate market (October, 2013) is a buyer’s market and many buyers have appointed Jean-Patrice to find them the perfect home in which to establish themselves. Moreover, a buyer who appoints a real estate broker in Montreal also can benefit from his or her services for absolutely free. Are European buyers a current trend on the Montreal market? Yes! According to Jean-Patrice, “Many of my clients are now buying condos for their children who are coming to Montreal to study. This is very smart, given the low interest rates on mortgages which allows clients to find a property that costs less than a rental apartment. Europeans do not hesitate to help their children -- to “invest in stone” as it is said overseas -- especially since Europeans have long understood that to invest abroad is financially sound and is otherwise an interesting way to bypass the hefty inheritance tax that is imposed in France.” Jean-Patrice Bourguet, a real estate broker at Via Capitale du Mont-Royal recognizes that although the Plateau Mont-Royal continues to retain its high status with customers, it is nevertheless refreshing to see that Europeans do not hesitate to expand their geographical area when looking for property within Montreal. This expansion can include other dynamic living areas such as the area surrounding Marché Jean-Talon, Rosemont – La Petite-Patrie and the vibrant Gay Village (the equivalent of the Marais in Paris).