While buying a home abroad has long been popular with retirees searching for warmer weather, today many young Canadians are also setting their eyes on foreign housing markets. As domestic housing prices become increasingly out-of-reach, some Canadians are choosing relocation as a realistic route to homeownership.
From both a lifestyle and investment perspective, buying outside of Canada has its advantages. That being said, the international real estate process typically comes with far more considerations and complexities compared to buying at home.
Here are a few things you should know before you begin your international home buying journey.
Understand the Cost of Living
The cost of living can vary by country, region, and even city. Depending on where you buy, housing and other everyday costs can be more affordable or more expensive compared to Canada.
If you’re considering buying a home abroad, ensure you understand the local cost of living and whether or not it fits your budget. Expatistan features a great cost of living comparison widget that can help you explore and contrast average costs in your destination city.
Thinking about selling your home and downsizing outside of the country? Download our complete downsizers guide here.
Finding International Properties
Outside of Canada and the United States, most countries do not have centralized listing databases like MLS. Therefore, finding a home will require working with a real estate agent in your buying destination. However, interviewing and hiring a trusted agent who will have your best interests in mind isn’t always easy, this is especially true if they live in another country.
That said, Your local real estate agent may have international connections that you can leverage. As a part of Sotheby’s International Realty, our team can help connect with trusted and experienced agents around the world.
International Financing
When it comes to mortgages and financing, there are some common misconceptions among Canadians who are purchasing their first foreign property. All buyers should know that most Canadian banks will not finance beyond the border. In fact, most foreign purchases are cash transactions.
However, buyers can pull equity from their domestic properties in order to support international purchases. Your real estate agent can help you understand the full spectrum of financing options based on your locational circumstances.
There’s more to finding a great real estate agent than you may think. Visit these blog posts to learn more.
- How to Read Between the Lines of Agent Reviews
- Why You Should Listen to Real Estate Referrals
- Rightsizing With Agents: How it Works
Taxes and Inheritance
While you won’t need to pay Canadian poetry taxes on a foreign home, be aware that you may be subject to one-time or regular taxation in your buying destination.
One of the most common mistakes Canadians make when buying out of the country is including the property in their will, assuming Canadian rules and regulations will apply. In many countries, the inheritance process varies dramatically from Canada, so how you title your property is very important. For instance, in Europe inheritance taxes are quite common. Or, in Mexico, you can designate a ‘survivor’ who won’t need to pay any taxes. Some countries do not allow title transfer altogether.
Your agent and lawyer can help you navigate the fine print during this process as there may be potential loopholes or workarounds.
Local Regulations and Legal Requirements
As you may expect, most of the legal red tape you’ll face when buying abroad will come from the regional and local jurisdictions of your destination.
Distinct laws and requirements can differ all the way down to the township so ensure you are thorough with your research. For instance, you may have a co-worker who purchased a condo in Mexico’s Quintana Roo state, however, you could be subject to entirely different laws and regulations if you buy in the neighbouring Campeche state.
Even if you’re buying a property for vacation purposes, you may require immigration or residency visas based on the duration and frequency of your visits. When in doubt, do your research and ask your lawyer. They can ensure you have your base covered and reduce the possibility of any legal challenges down the line.
Thinking about selling your home and moving abroad? Explore these helpful resources from our blog.
- Why Right Now is the Best Time to Sell Your Home
- Should You Wait to Sell Your Home After COVID-19?
- Are Pre-Listing Renovations a Good Idea?
Closing Costs
Similar to taxation and legal considerations, closing costs can vary by location. Like Canadian real estate transactions, the seller is usually responsible for the costs of agent commission in most popular buying destinations. However, each country is unique and you should do your research before you begin the buying process to avoid surprises.
Don’t forget to ask your agent or lawyer about land transfer tax or any other one-time costs that you may be responsible for as the buyer.
