Penalty for being a non-resident investor?

[kridarts]

Currently, my Dutch business partner and myself are investing in condo`s in BC and we have bigger plans coming up.
The banks however, have changed their policy and maxed the mortgages for non-residents to 65%.
Anyone out there that has experience or expertise with the legal aspects in order to avoid these situations in the future?
Cheers,
Dirk

 

[Thomas Beyer]

Two thoughts here:

You can open a corporation .. with you as the class A voting share holder and the director .. and the non-resident funds as class A or class B non-voting (preferred) shares or shareholder loan. Then the company owns the asset and qualifies for the mortgage, usually personally guaranteed by you.

There will be withholding taxes on dividends or income paid by the corporations to non-residents unless certain forms are filed !

a 2nd option is that you alone own the asset legally, with a JV agreement in place to show who gets what % of profit or fees when .. however to qualify for a mortgage the bank has to see proof of down payment ! Once the title is transferred to you the non-resident co-owner can add a caveat on title for his interest in the property.

 

[ToddStokowski]

Solid advice.
Todd

 

[Nicola]

You could also try HSBC. In the past they have given 75% mortgages to non-residents.

 

[kridarts]

QUOTE (thomasbeyer2000 @ May 25 2009, 05:28 PM) Two thoughts here:

You can open a corporation .. with you as the class A voting share holder and the director .. and the non-resident funds as class A or class B non-voting (preferred) shares or shareholder loan. Then the company owns the asset and qualifies for the mortgage, usually personally guaranteed by you.

There will be withholding taxes on dividends or income paid by the corporations to non-residents unless certain forms are filed !

a 2nd option is that you alone own the asset legally, with a JV agreement in place to show who get what % of profit or fees when .. however to qualify for a mortgage the bank has to see proof of downpayment ! Once the title is transfererd to you the non-resident co-owner can add a caveat on title for his interest in the property.

Thank you Thomas, I very much appreciate your input.
We are currently discussing it from a tax viewpoint with KPMG and I am still looking for a real estate lawyer who fully understands this matter, so we can formalize the legal aspects. Any suggestion?
Sincerely,
Dirk Terpstra

 

[kridarts]

QUOTE (Nicola @ May 25 2009, 06:00 PM) You could also try HSBC. In the past they have given 75% mortgages to non-residents.

Thanks very much Nicola for your input.
You are completely right and that is what we have been doing so far.
However, they have tightened their policies to a maximum of 65% financing and for the future they even might want to cut this fully, as the banks are in not such a healthy liquidity position.

Dirk

 

[Nicola]

QUOTE (kridarts @ May 26 2009, 10:17 AM) Thanks very much Nicola for your input.
You are completely right and that is what we have been doing so far.
However, they have tightened their policies to a maximum of 65% financing and for the future they even might want to cut this fully, as the banks are in not such a healthy liquidity position.

Dirk

Oh, that`s too bad. They were a good option for non-residents.