Buying a beach house somewhere to escape winter in Canada is an appealing thought. The fact that our dollar can go a long way in many parts of the world and the idea of purchasing real estate outside of Canada is even more enticing.
Whether you are a retiree looking for a way to enjoy the golden years or a young professional who can’t make your budget stretch enough to buy a Canadian home, a home purchase outside of Canada might be the perfect solution.
But before you start looking at properties for sale, read this article. We’ll cover everything you need to know about buying property abroad.
First, do your research
It’s easy to get swept along on the dream of owning a home somewhere sunny and exotic. But don’t let ocean views distract you from the important research you need to do. There are so many things potential buyers must not overlook.
Carefully consider the perks and pitfalls of your destination country. Then, consider the city or town and how that will suit you long-term. Ideally, you’ll want to visit your chosen area twice before you buy: once during the high season and once again in the off-season. You might be surprised by the drastic change between both visits.
You’ll need to learn the rules for foreigners buying real estate. In Mexico, for example, there are restrictions on where foreigners are permitted to buy property. If you buy in the US, you’ll be subject to a foreign national fee which will equal a higher mortgage.
But it’s not all bad. Some countries offer perks to foreign buyers such as permanent residency or even citizenship. Other countries give foreigners who spend over a benchmark amount on a home, an investment visa that allows them to live in the country long-term.
Finally, look at the quality of the construction of the property and think about resale value and demand for rentals in the area.
Factor in additional fees
When you are ready to buy property outside of Canada, don’t just look at the price tag. There are many other costs to consider, some of which wouldn’t be applicable in Canada.
You will likely have to pay foreign taxes. Then there’s utilities, upkeep, and insurance. What about a property manager to handle your home while you are away? If you plan to rent, don’t forget about housekeeping fees to keep the property clean for your guests.
Be aware that if you rent out your property, you will need to report that income for tax purposes in Canada. Also, there may be limitations on renting out your property depending on where it is. Be sure to check the local bylaws.
Many communities have monthly maintenance fees. Depending on the area, you might want to invest in a monitored security system.
Finally, remember that you will have to budget for the cost of round-trip travel so you can get to and from your property.
Find the right mortgage
Getting a mortgage on an international property can be expensive and difficult. For one thing, those institutions won’t typically have access to your credit score. Choosing a lender that has ties to Canadian banks will make the process much easier. Many of these banks will use your Canadian credit score and may even waive the foreign national fee.
Start by approaching Canadian banks to make your dream of owning a home in an exotic location a reality.
Test it out before you buy
You might be itching to put down a deposit and start buying furniture. But experts recommend caution.
If you aren’t intimately familiar with the location, your best option may be to start off by renting somewhere in the area. It’s kind of like kicking the tires before buying a used car. This is the best way to get a sense of the community and location you have your eye on.
Understand how long you can stay
When you live outside of Canada for part of the year, you may incur tax responsibilities. Most countries have tax treaties with Canada, each with its own rules. You can read the treaties on the Department of Finance website. Unless you are an expert on legal and tax matters, you should seek advice from professionals who have in-depth knowledge of Canadian regulations.
Though there are numerous hassles to contend with when buying property outside Canada, it can be the best decision you’ll make. Just be sure to do your research before you buy.
What part of the world would you want to buy a home in? Let us know in the comments.
Graduated from the University of Toronto with an Honors BA English Specialization and has completed several publishing courses at Ryerson University. She is a proofreader, editor, and content writer based in London, Ontario.