Selling Real Estate in Calgary
When a non-resident sells Canadian real estate, he/she is required to pay the appropriate amount of taxes on any capital gain. The normal Canadian tax rates will be applied to 50% of the gain. However, a non-resident is required to pay an estimate of the tax before the sale, an amount equal to 25% of the gain. This amount is to be retained by the seller’s lawyer until such time as a clearance certificate is received from the Canada Revenue Agency (CRA) in connection with the sale of the property. Upon payment, the CRA will issue a clearance certificate to the seller, but not until there has been a contract of purchase and sale with all subjects (conditions) removed. The wait for the certificate is usually 6-8 weeks. If the certificate is not obtained, the purchaser is required to withhold from the sale proceeds, a percentage of the selling price (usually 25-50%).
On or before the closing date, the mortgage money is transferred to the seller’s lawyer and then to the seller and the title is transferred to the buyer’s name.
The non-resident seller should file a Canadian income tax return for the year in which the sale occurs and should expect to receive a refund of a portion of the taxes paid. The taxation of Canadian real estate depends on whether the use of the property is for a principal residence, an active business or as a rental property. If it is used as a rental property, a 25% non-resident tax must be paid on the gross rent a tenant pays. However, if you use a professional property manager, the manager will, by law, withhold 25% of the gross rental revenue at source to be remitted to the Canada Revenue Agency. Then on or before March 31 of the following year, the property manager issues an NR4 form and you then have the right to file a Canadian tax return. The tax return is due before June 30 and enables you to claim expenses against that income and potentially request a refund.
Many countries, such as the U.S., have tax treaties with Canada that prevent you from being taxed in both Canada and your home country. It is advisable to contact a tax accountant in your country for more information.
From A Seller’s Standpoint
Marketing is just one of the benefits of using a REALTOR®. Using a REALTOR® gives your property more exposure than you could ever get on your own. We utilize the internet through our own personal websites as well as MLS®, one of the most frequently hit websites in the world. Most agents also use other forms of marketing such as the REALTOR® Showcase, take advantage of the opportunity to hold open houses, and do in-house marketing with other agents.
The other great advantage when you are selling your home is having a professional to guide you in pricing your home. The general public knows what a home is listed for, but it is harder to know what a house actually sells for. You may be leaving money on the table by not using a professional. Sure you save in not having to pay commissions, but the hassle and the possibility of not getting the most you can for your home in the current market should balance out and make using a Real Estate Agent a no-brainer.
REALTORS® have the advantage of weekly meetings and can preview new listings during these meeting so that each agent in attendance of the meeting can preview your home. This is an advantage to get your home instant exposure and is a great way to have your home showcased to other agents in our company.
Branding is also a key component, and using a REALTOR® gets you attention.
From A Buyer’s Standpoint
As a buyer, if you see a property that has a sign in the window, in the newspaper, or online that is being sold by its owner, do not hesitate to ask me about the house. I have the ability to do additional research on the house for you, as well as contact the seller on your behalf and negotiate the terms for you. We can work my commissions into the price so that I am compensated for my work with you on all houses previously shown, and it will not make much of a difference on your payments. Commissions will need to be discussed on a case by case basis.
With a market as busy as our real estate market, there are a lot of “For Sale By Owner” homes on the market. As a buyer you need to be aware of potential risks with buying privately. From a buyer/seller perspective, you as the buyer are the one taking all of the risk in the deal. By working with a REALTOR® you are protected, as all of our forms are legal and we make all sellers fill out and sign a Property Condition Disclosure Statement which gives you ALL the information they are aware of; if it doesn’t, you are protected under the contract, and your lawyer has the ability to fight on your behalf. If a vendor refuses to sign this form, there may be a reasonable explanation (ie: revenue property, therefore they don’t know as much about it). We, as agents, will do research on the property, as research is essential.
So, beware of FSBO’s. As buyers and as sellers you are not professionals, so why not use our experience and resources to do the job for you? It IS the largest investment of your lives. Would you use someone other than a professional to fix your car, perform surgery, etc?
We can help you with financing options, help you locate potential properties, provide you with objective information about the property and the area in which it is located, negotiate on your behalf with things such as price, financing, inclusion/exclusion of repairs, furnishing, fixtures, etc., and all of the final closing procedures such as communicating with the lenders, lawyers, vendors, and so on.