non resident investor

[Alvaro Sanchez]

Can a non-resident of Canada invest? That is, a) can the non-resident be on title if he provides a 2nd mortgage? b) partner with you and be on title, how would the mortgage be, or CMHC restrictions?


regards

 

[Thomas Beyer]

Here is my understanding:



yes they can invest and own or co-own real estate in Canada but you as the agent or the property manager must withhold 25% of the rent unless they file a non-resident declaration with CRA .. and then you must withhold 25% of net income (before depreciation)



Talk to an accountant.



The property manager or you the agent becomes liable if you do not file the 25% of GROSS RENT (!!!!) on behalf of the non-resident without the ITN. Therefore, it is probably a good idea to get an ITN for them or have them get one (Individual Tax Number) .. as 25% of gross rent is quite hefty .. and if they find out 3 years later they may come to YOU and attempt to collect 3 years of arrears !



More here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html and here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

 

[RussellWestcott]

Personally, I have dealt with non-resident investors... and the simplest way to complete the transaction, if for you to personally buy and close on the property (that means you have to be able to buy and qualify for a mortgage on your own). After the property closes, your out of country investor can buy into the property.



Typically the way I do this is having an out of country investor buy a percentage of a property that I already own in my portfolio.



I have found it too difficult for the out of country investor to qualify, and buy the property on their own (with me as a partner). There are too many good Canadian candidates that I can work with instead of dealing with out of country money partners.

 

[Alvaro Sanchez]

Thanks, both points well taken...

 

[Peter]

If you are on title with a non-resident, most banks will want 35% down (with a few exceptions where income can be verified). Generally, the maximum loan is 65% LTV and is treated as an 'Off-shore' purchase.

These deals are not unusual an can most certainly be done. if you don't want to put 35% down, then follow Russ' advice and purchase it in your name and have a seperate agreement with your investor. The catch to that is the ability to show the down payment coming from your own resources.



let me know if you want any other info.



Peter

 

[jsurabathula]

Peter,



A clarification on this one:



"if you don't want to put 35% down, then follow Russ' advice and purchase it in your name and have a seperate agreement with your investor. The catch to that is the ability to show the down payment coming from your own resources"



Would it be possible to show that my investment partner has transferred money to me and and we make an agreement between both of us? The mortgage & property is still in my name.

The lenders would still question the offshore transaction - isnt't it?



Regards,

John Surabathula

 

[Hagen]

John,

The transfer of funds between your partner and yourself would need to be made in the form of a "gift" letter, and explicitly state that the "gift"is not required to be repaid. If this gifted amount is repayable, then your mortgage qualification would have to include the debt service of those gifted funds.

In addition, the gift cannot be an arms-length transaction, rather must come from an immediate relative.