[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]
The sale of an existing residential property which is occupied by its owner and not rented property is not subject to GST or QST; however, if the owner of the property resides in part of it and rents part ( e.g. , a duplex or triplex), the portion not used by the owner as a residence, determined on a pro-rated basis, will be taxed in the same manner as the sale of a commercial property. The sale of a commercial property is subject to both GST and QST, unless both parties declare in the deed that they are registered for both taxes, provide their respective tax numbers and file an election to have the transaction be treated as non-taxable. It is the buyer’s obligation to collect and remit the GST and QST, s o the seller’s tax numbers should be verified; if they are invalid, the buyer will be liable to pay these amounts to the tax authorities. If the seller is not a Canadian resident, the buyer must withhold 25% of the gross proceeds in trust (typically with the officiating notary) until the Canada Revenue Agency confirms the amount to be paid and issues a certificate of compliance (“tax clearance certificate”) when the tax has been fully paid, at which time any excess funds may be released to the seller. A buyer who fails to withhold and remit the required tax could be held liable for the entire amount, plus penalties and interest. VII. RECORDING REAL ESTATE DOCUMENTS The Quebec land register traces all real estate transactions carried out in Quebec since its creation in 1830. The overall system is known as the Cadastre du Québec, and the province is divided into various registration divisions, each one of which has its own registry office. Title can be searched electronically via the Index of Immovables, using the lot number. The municipal evaluation is also generally accessible
on-line, depending on the municipality, using the civic address, which will also yield the lot number(s). Copies of the registered deeds may also be ordered on-line. Leases under Québec law are a personal, rather than a real, right. However, notice of the lease may be published against title. This protects the tenant by ensuring that if the property is sold, the new owner must respect the balance of the term of the lease, including any renewal options. If the lease was not published before the sale, the new owner is only obliged to continue it for the shorter of the balance of the term (not including renewals) and 12 months from the date of the sale. This puts the tenant is a very precarious position, particularly if the premises are desirable and the rental is below market, if the tenant cannot easily find replacement premises, or if the tenant has made significant improvements and cannot recoup their cost. Since February 1st, 2021, all documents to be published at the Land Registry may be submitted electronically or in paper form. A digital inscription may be submitted by land surveyors and bailiffs, in addition to lawyers and notaries, even if they did not prepare the underlying document. As of November 8, 2021, only digital submissions will be accepted. VIII. ANNUAL COSTS FOR PROPERTY OWNERSHIP In addition to the purchase price, a buyer must typically budget for the following annual expenses of property ownership: A. Property Insurance (including boiler and machinery, fire, damage and liability). B. Property Taxes (municipal, school, water, special assessments); if all or part of the property is rented out, the rental income will be subject to income tax in the hands of the landlord.
ILN Real Estate Group – Buying and Selling Real Estate Series
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