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v88
Joined: 28 Feb 2010
Location: here
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 Posted: Fri Mar 15, 2013 5:48 pm Post subject: Buying a house back home |
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Has anyone here done that?
My wife and I finally have our place here paid for and have enough savings to put money down on a place back in Canada (where I'm from) for either investment or in the event we choose to move back.
Anyone have advice for a first time buyer living abroad? |
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Adam Carolla
Joined: 26 Feb 2010
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| Posted: Fri Mar 15, 2013 11:32 pm Post subject: Re: Buying a house back home |
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| v88 wrote: |
Has anyone here done that?
My wife and I finally have our place here paid for and have enough savings to put money down on a place back in Canada (where I'm from) for either investment or in the event we choose to move back.
Anyone have advice for a first time buyer living abroad? |
It can be done. There will be a lot of paperwork going back and forth between you and your lender. Also, I found that smaller banks tend to be more flexible with overseas income. (By which I mean, when I was looking at buying a house 5 years ago when I was living in Korea, the large national banks wouldn't give me the time of day. But I spoke with some smaller regional banks and they were much more flexible about dealing with someone outside the country.)
So check with a few different banks. If you get one that's willing to talk, then you'll just have to prove that you've got a decent income and a good credit score. |
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Who's Your Daddy?
Joined: 30 May 2010
Location: Victoria, Canada.
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| Posted: Fri Mar 15, 2013 11:33 pm Post subject: |
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| The CDN govt. might then deem you a resident for tax purposes, so be careful. |
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No_hite_pls
Joined: 05 Mar 2007
Location: Don't hate me because I'm right
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| Posted: Sun Mar 17, 2013 9:50 pm Post subject: |
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| Who's Your Daddy? wrote: |
| The CDN govt. might then deem you a resident for tax purposes, so be careful. |
+1 |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Sun Mar 17, 2013 9:54 pm Post subject: |
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| Who's Your Daddy? wrote: |
| The CDN govt. might then deem you a resident for tax purposes, so be careful. |
That makes a lot of sense.
As well, I'd wager that you may be inevitable for certain programs. Buying a house is expensive, and there are many hoops to jump through - my worry is, if you're out of the country, they might say something like "you're not eligible for XYZ gov coverage. You have to now buy this more expensive one." |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Sun Mar 17, 2013 10:16 pm Post subject: |
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You probably won't qualify for a (CMHC backed/insured) high ratio mortgage (being offshore and using offshore income that was not subject to Canadian taxes) so you are looking at 25% down.
Beyond that you have 2 options for taxation.
File taxes on your world wide income as a "deemed resident" Canadian and enjoy your home ownership
or
file taxes on your Canadian income and investments as a non-resident (rate is about 25% and subject to capital gains as an investment rather than as a personal dwelling).
You might want to consult a tax accountant back home for all of the implications before you buy.
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PatrickGHBusan
Joined: 24 Jun 2008
Location: Busan (1997-2008) Canada 2008 -
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| Posted: Mon Mar 18, 2013 4:56 am Post subject: Re: Buying a house back home |
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| v88 wrote: |
Has anyone here done that?
My wife and I finally have our place here paid for and have enough savings to put money down on a place back in Canada (where I'm from) for either investment or in the event we choose to move back.
Anyone have advice for a first time buyer living abroad? |
We did that years ago (a house and then an apt building).
However, since then the housing loans rules in Canada have tightened up significantly. It is now harder to get a housing loan and I suppose being abroad will not help initially.
Things that matter most: your credit history, your debt ratio. You need solid credit in Canada or the bank will not really consider your application viable (unless you can pay the house cash up front, which brings up other issues). Your debt ratio is also key, it is a percentage of your worth that cannot be higher than a certain threshold, you will need to check with banks for this. Basically what counts as debt is any money you actually owe, the credit limit on your credit card (s), any lines of credit you have, car loan and so on.
If you do buy a house in Canada, it can mean you are deemed a resident for Canadian tax purposes as a house would qualify as a significant tie to Canada.
If you do qualify and buy then you need to consider insurance, a proper rental agreement for those you will rent the house to, setting up a bank account home for the rent and ideally finding someone you trust or hire to look after the house since you are abroad. If you rent the house (only reason to buy a house from abroad if you ask me) then you will need the proper insurance policy AND to declare the rent you receive as income. this means paying income tax on it. All of this can be well worth it if you look at things longer term as the assets you accumulate in terms of real estate value and the convenience of having a house if you return far outweigh (in my opinion) the taxes you may need to pay.
You can also put the house in the name of someone in your family (if that is an option for you) which would change the taxation issue for you.
All that being said, we did this early on and when we moved to Canada we had a house that was paid for and an apt building that was partly paid for. That can be a huge asset and a great way to have a smooth landing when you guys move to Canada (if you do) |
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jonpurdy
Joined: 08 Jan 2009
Location: Ulsan
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| Posted: Mon Mar 18, 2013 6:03 am Post subject: |
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I noticed this when I was declaring myself a non-resident to the CRA.
You're paying like 3% Korean taxes in Korea and no taxes in Canada if you have no house. As soon as you buy a house in Canada you end up paying 25% taxes. Out of curiousity, how does it make financial sense to buy just one house there? It's not like the market is skyrocketing these days. |
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v88
Joined: 28 Feb 2010
Location: here
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| Posted: Mon Mar 18, 2013 7:49 am Post subject: |
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| jonpurdy wrote: |
I noticed this when I was declaring myself a non-resident to the CRA.
You're paying like 3% Korean taxes in Korea and no taxes in Canada if you have no house. As soon as you buy a house in Canada you end up paying 25% taxes. Out of curiousity, how does it make financial sense to buy just one house there? It's not like the market is skyrocketing these days. |
Well, I'm not interested in the value of the home increasing...that would be nice, but not really important. I'm looking to have someone else pay for it essentially. My renter will cover most costs provided I don't then take the hit on taxes. I can have my mother buy the house as a second property, resulting in similar down payment / interest rate schemes as mentioned above for me buying it from abroad. I will then have to pay her to cover the increase in taxes she will be expected to pay.
I also have the added benefit of having a home to go back to in Canada. |
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v88
Joined: 28 Feb 2010
Location: here
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| Posted: Mon Mar 18, 2013 7:51 am Post subject: |
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| Thanks for all the info guys. Very helpful! |
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