Q. Can a non-resident (foreign Buyer) purchase property in Whistler?
A. Yes, There are no restrictions to foreign ownership here. We work with Propertry Buyers from around the world. Purchasing real estate in Whistler will be simple and stress-free using the services of a Canadian accountant and lawyer specializing in British Columbia real estate.
Q. How do I arrange a mortgage for the purchase of my Whistler home?
A. Foreign banks cannot register mortgages in Canada, but mortgage financing for all types of Whistler property can be arranged quickly by phone or online. If you are visiting from another country it is recommended to open a Canadian Bank account while you are here. Call or email me to learn more. Conventional mortgages usually require a 20 per cent down payment. In some cases, high ratio financing requiring as little as five per cent down is available. For most out-of-country buyers, 40 per cent down payment is required, but many of our clients have been approved for as little as 20 per cent down. First time buyers may be eligible for a property purchase tax exemption and GST/HST applicable properties may be entitled to a tax rebate.
Q. How much are closing costs?
A. You should allow approximately $1,500 for legal fees to have a lawyer convey the transaction to your name with the B.C. Land Titles Office. You’ll also need to budget for adjustments to the taxes and sewer/water. This could be anywhere from a few hundred dollars to a couple of thousand depending on the property and time of year. Finally there is the Property Purchase Tax.(PTT). This Provincial tax applies to all transfers of real estate and it is payable by the purchaser on the completion date. The PTT is 1% on the first $200,000.00 of the purchase price and 2% on the balance.
Q. Do I need Insurance?
A. Purchasers are required to arrange insurance on single-family residences. Banks in B.C. or lenders providing a mortgage on a property require this insurance on the completion date of purchase. The strata corporation insures Strata Titled properties. Strata Titled purchasers should consider obtaining liability and contents insurance.
Q. What are Strata Titled Properties?
A. Purchasers of strata titled properties (Condos, Townhomes, Duplexes & Fractional ownership) are responsible for paying monthly maintenance charges. These charges take care of things like snow removal, landscaping and upkeep of common area amenities (pools, hot-tubs and structures). The strata corporation is also entitled to levy special assessments for extraordinary expenses should there not be sufficient money in the contingency reserve fund. Prior to committing to your purchase, strata minutes should be reviewed carefully to determine whether the strata corporation anticipates any extraordinary expenditure.
Q. I want to buy a chalet and rent it out for vacation rentals. Can I do that?
A. Unless you purchase a house that is specifically zoned for nightly rentals (TA Zoned) you cannot rent your chalet on a nightly or weekly basis. Most chalets, cabins and homes are in residential zones. You can only rent these on a monthly, seasonal or yearly basis. However there are a few areas in Whistler where homes are zoned for nightly rentals (TA Zoned). You will find more Condominiums that have TA zoning allowing for the flexibility of nightly rentals.
Q. What are Phase I and Phase II covenants?
A. These covenants are only found in TA Zoned (Tourist Accommodation) areas and mainly found with Condos. Properties covered by the Phase I covenant have the flexibility of being rented out nightly, monthly or used by the owner 365 days a year.
Phase II Covenant restricts the owner’s personal use of the property to 28 days in the summer and 28 days in the winter and defines how these periods may be booked. The property must be available for rent through a property manager for the remaining days of the year. Most hotel style suites are Phase II and run on a pooled revenue basis. This means that every month the revenue for the entire building is pooled together and divided out to each owner according to that suite’s size, view, floor plan, etc. The rental manager in these buildings has the contract to handle the entire building and you must use the rental management company that's in place.
Q. Can I get positive cash flow from my Whistler rental property?
A. Rental property here is not the money making machine you would think it is. If you’re looking for your Whistler revenue property to break even or give positive cash flow then you would need to put from approximately 40 to 50% down – even more in some cases. Think of your Whistler investment as a home in North America’s #1 ski resort that you can call your own with a healthy upside for capital appreciation.
Q. What are Tourism Whistler Fees?
A. Properties located on Resort land (Tourist zoned properties close to the mountains) are subject to a bed tax. This bed tax is a quarterly fee based on the number of bed units in the property (one bedroom equals two bed units). If the property is for personal use only and is not available for rent more than 14 days per year, you may file a Declaration with Tourism Whistler to pay a lower rate of fees. This tax goes towards the budget of Tourism Whistler, which markets the resort around the globe.
Q. I submitted a subject offer on a property that I want to purchase and now it is accepted. What happens next?
A. If you are purchasing a Strata Titled property we will want to review the strata meeting minutes, AGM minutes and Form B from the strata manager. Next we will want to arrange a building inspection (if applicable) of the property. If everything meets our approval and we have a firm contract, we will next wire the deposit to the brokerage.
Q. Now we have a firm contract and our subjects have been removed. What do we do now?
A. At this stage you will send the contract to your lawyer to draft all the applicable transfer papers and send them back to you. You’ll need to sign, have them notarized, and courier it all back to your lawyer as quickly as possible - time is of the essence. Now is a good time for you to arrange electricity, phone, and cable hookup.
Q. I’ve heard about something called Withholding Tax on rental income. What is it?
A. Canada Customs and Revenue Agency (CCRA) requires non-residents to pay twenty-five percent (25%) of the gross rental income from the property to CCRA.You may obtain a reduction in such withholding tax if you complete a government form called an NR6 setting out that the projected income are offset by the anticipated expenses associated with the property. Most rental managers will assist in the completion of the NR6 return. Upon having filed NR6, you are obligated to file an annual Canadian tax return with respect to the property with CCRA. CCRA will only allow expenses to be claimed if the returns are filed and will disallow any expenses incurred more than two years prior to the time of filing the return. It’s very important that your returns are kept current to avoid expenses being disallowed and tax being paid on the gross rental income.
Q. I'm thinking of selling my Whistler property. What are some of the costs involved? What about Capital Gains Tax?
A. It is a condition of a non-resident selling property in Canada that they first obtain a Clearance Certificate from Canada Customs & Revenue Agency. The current wait for a Clearance Certificate is approximately 6 to 8 weeks. Prior to Canada Customs & Revenue Agency issuing a Clearance Certificate they will wish to collect any tax payable with respect to the property - this will include any tax payable on the rental income from the property which has not already been remitted as well as tax on the capital gain experienced on the property and if applicable, recapture of capital cost allowance.
In calculating the capital gain on the property Canada Customs & Revenue Agency allows only the following to be added to the purchase price to determine the adjusted cost base:
Property Transfer Tax which is 1% on the 1st $200,000 and 2% on the remainder. Legal fees and disbursements in conjunction with the purchase Furnishings and renovations included in the selling price;(receipts for the included items will be required). It is critical that you retain receipts for the furnishings and that they identify the furnishings and as having been acquired for the Whistler property as well as any Customs documentation showing furnishings acquired in other jurisdictions have been brought to the Whistler property. Goods and Services Tax (GST) which is 5% A portion of the interest on mortgage payments (only if the Vendor has properly elected to have the interest capitalized on their tax return). Canada Customs & Revenue Agency does not allow any deductions from the selling price in determining the gain (i.e. you cannot subtract the real estate commission, legal fees or GST paid on the selling commission). The amount required to be remitted on the gain is typically 15 to 20% of the gain. By filing a Canadian tax return subsequent to the sale, you can claim expenses such as commission and legal fees and some of the tax paid may be recovered. Sellers should contact their accountants or lawyers with respect to requesting a Clearance Certificate as soon as an accepted offer has been received with respect to the property. Should the completion date be prior to the issuance of the Clearance Certificate, a holdback of between 25% and 50% of the sale price will be required by the Buyer's lawyer before the Clearance Certificate is issued.
Please note that the Buyer's lawyer may take the position that if the property has been rented out it is a depreciable property and therefore the holdback is 50% on the portion of that purchase price that relates to the building.