[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]
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surcharge of up to 3% for properties having a purchase price or municipal evaluation over $500,000. This is the case in many cities including Montreal, its suburbs, and surrounding areas. For example, Montreal charges (i) 0.5% on the portion of the purchase price up to $53,200; plus (ii) 1.0% of the portion of the purchase price between $53,200 to $266,200; plus (iii) 1.5% of the portion of the purchase price between $266,200 and $532,300, plus (iv) 2.0% on the portion of the purchase price between $532,300 and $1,064,600; plus (v) 2.5% on the portion of the purchase price between $1,064,600 and $2,059,000; plus (vi) 3.5% of the portion of the purchase price between $2,059,000 and $3,000,000; plus (vii) 4% on the portion of the purchase price in excess of $3,000,000. Even where an exemption applies, the city has the right to charge a supplemental tax as follows: none if the taxable value is less than $5000, 0.5% of the taxable value between $5000 and $40,000, plus a fixed amount of $200 if the taxable value exceeds $40,000. Non-residents As of January 1, 2023, non-Canadian residents were barred from directly or indirectly purchasing a Canadian residential property for a period of 2 years. The Canadian government recently announced its intention to extend this ban for an additional 2 years, expiring in 2027. These properties include (i) a detached house or similar building containing up to 3 dwelling units; (ii) a part of a building that is a semi- detached house, row house unit, residential condominium unit, or similar premises that is intended to be owned apart from any other unit in the building; and (iii) vacant land zoned for residential or mixed uses in a Census Metropolitan Area or Census Agglomeration, but excludes recreational properties outside of Census Metropolitan Areas or Census Agglomeration.
Prohibited purchasers include individuals who are not Canadian citizens or permanent residents of Canada, corporations that are not incorporated in Canada, and corporations controlled by foreign corporations or individuals who are not Canadian citizens or permanent residents of Canada. While the Regulations are not yet finalized, the threshold will probably be either direct or indirect ownership of 3% or more of the value of equity or voting rights of a corporation, or control in fact. This prohibition does not apply to (i) the acquisition by an individual of an interest or a real right resulting from death, divorce, separation or a gift; (ii) the rental of a dwelling unit to a tenant for the purpose of its occupation by the tenant; (iii) the transfer under the terms of a trust that was created prior to the coming into force of the Act; (iv) the transfer resulting from the exercise of a security interest or secured right by a secured creditor; (v) a non- resident spouse or common-law partner of a Canadian resident where they buy the property together; (vi) refugees; and (vii) temporary residents who meet certain prescribed conditions set out in the Regulations (which may include students and certain foreign workers). Adjustments The buyer and seller generally adjust for taxes, utilities, and other prepaid expenses as at the date of transfer of ownership. In addition, in the case of commercial property, adjustments are also made for rents, third party operating expenses and common area maintenance expenses. Typically, the offer and deed will provide that the buyer chooses the notary and pays the notarial fees, including the cost of publication and the provision of notarial copies to both parties. If the purchase is financed, the lender will choose the notary to receive the deed of hypothec (mortgage), who will ideally also
ILN Real Estate Group – Buying and Selling Real Estate Series
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