Buying or selling a home is an exciting journey, but it's one filled with important considerations that go beyond just picking out paint colours and furniture or figuring out what your next investment will be. There are legal aspects to be aware of, especially when it comes to your residency status and/or your marital situation.
To help you better understand the key factors that can impact your real estate transactions, we reached out to the legal minds at Meirovici Zywot LLP to break down some of the complexities and legal considerations to keep in mind when looking to buy or sell.
Residency Considerations
For Buyers
Prohibition on the Purchase of Residential Property by Non-Canadians Act
This sounds like a mouthful, but it's essentially new Canadian legislation which prohibits Non-Canadians* from buying residential property. There are exceptions, though. So, if you're not a Canadian citizen, permanent resident, or a company that has either of these as its primary owner, make sure you meet the criteria if you're eyeing that dream home in Canada.
*As defined by the Prohibition on the Purchase of Residential Property by Non-Canadians Act
Non-Resident Speculation Tax
Even if you meet the above exceptions, there may still be an extra tax owed at closing, namely the Non-Resident Speculation Tax. Beware of this potential additional expense and speak to your agent to make sure if it applies to you.
It's important to note that real estate agents aren’t allowed to encourage or aid Non-Canadians in purchasing residential property – whether directly or indirectly. Doing so is a big no-no. So, if you’re neither a Canadian citizen nor a permanent resident, make sure you’re working with a real estate agent who knows, understands, and respects these regulations.
For Sellers
Non-Resident Seller
If you find yourself selling a property and you're a Non-Resident of Canada*, things can get a bit tricky. There's a chance your lawyer will have to hold a portion of your sale proceeds until you get the green light from the Canada Revenue Agency (CRA) that all proper taxes have been paid. This can cause serious issues if you haven’t worked your numbers correctly, so make sure to keep this in mind.
*As defined by the Income Tax Act
Spousal Considerations
For Buyers
When you're buying a property with your spouse or partner, how you take title (or assume ownership) matters.
There are different ways to do it – such as Joint Tenants or Tenants in Common – and each comes with its own set of rules in the event one of you passes away (not a comforting thought, we know). It's worth exploring these options with your agent and lawyer to find the one that suits your situation best.
Spousal Consent
If married and the purchased property is your Matrimonial Home*, your spouse's consent may be required for certain actions, such as taking out a mortgage on the property.
*As defined by the Family Law Act (Ontario)
First-time Homebuyer Rebate
Here’s an interesting twist: Even if your spouse isn’t on the property’s title, their status as a first-time homebuyer can affect your eligibility for certain rebates. Bear that in mind if you’re both entering the housing market together, and either of you has owned a home anywhere in the world in the past.
For Sellers
Spousal Consent (Again)
When it's time to sell your home, spousal consent typically comes into play once more. This essentially means both spouses need to be on the same page when selling their Matrimonial Home.
Remember, the information we've provided here is meant to give you a general understanding of these very complex topics. It is not and should not be relied upon as legal advice.
If you have specific questions or concerns about your unique situation, you can reach out to Meirovici Zywot LLP – they’re always happy to help – or consult with a legal professional of your choosing for tailored guidance.
Whether you’re buying or selling, make sure you're well informed about the rules surrounding your residency and spousal status. And if you’re simply considering getting into the market, there’s no time like the present to start your research. Sign up for a condos.ca or property.ca account to get access to price history, comparison tools and more to help you make smart real estate moves.