7 REASONS TO INVEST IN REAL ESTATE IN CANADA!
- Marion Pudeleau
- Feb 16
- 4 min read
Are you a seasoned real estate investor or simply looking to diversify your assets and find a good investment? Consider real estate investment in Canada!
UPDATE FEBRUARY 2023 :
Unfortunately, the new Prohibition on the Purchase of Residential Property by Non-Canadians Act* came into effect in Canada on January 1, 2023, banning non-Canadians from investing in real estate for a period of four years. I explain this law in detail here!
This is unfortunate because investing in real estate in Canada is highly advantageous. The country offers an attractive market that French investors, as well as other foreign buyers, would be wise not to overlook!
Let's explore 7 key reasons why investing in the Canadian real estate market is a smart move and why you should take advantage of it!
1- ACCESS TO BANK LOANS AS A FOREIGN BUYER
First and foremost, it’s essential to highlight that even if you are a foreign resident living outside Canada, you can still obtain financing from a Canadian bank.
Unlike in the United States, where getting a loan from a local bank can be quite difficult, Canada offers much easier access to bank financing!
To qualify, you’ll need to provide a down payment of at least 35%.
This might seem like a lot compared to the typical down payment required in France, but don’t forget that we’re talking about Canadian dollars, and the exchange rate is in your favor if you're using Euros.
2- A VERY FAVORABLE EURO TO CANADIAN DOLLAR EXCHANGE RATE
Currently, the exchange rate is approximately 1 Euro = 1.49 CAD.
For example, let’s take the median price of a 3 ½ condo (equivalent to a two-room apartment in France) in Montreal, which was CAD 420,000 in March 2022.
If we consider a 35% down payment, that would be around CAD 147,000, which translates to approximately €98,700.
At first glance, this may seem expensive compared to the down payment required for an apartment in a major French city like Lyon. However, in France, you also have to account for additional costs like real estate agency fees, notary fees, and transfer taxes, which are often quite significant!
In Canada, these costs are significantly lower, making the overall acquisition cost much cheaper than in France, thanks to the favorable exchange rate, even with a 35% down payment.
3- LOW ACQUISITION COSTS
When considering the main costs associated with purchasing a property in Canada, they primarily include:
Home inspection fees
Notary fees
The "Welcome Tax" (equivalent to France’s property transfer tax)
For example, if you purchase an apartment in downtown Montreal for CAD 420,000, the total acquisition costs would be around CAD 7,000, or approximately €4,700.
Adding the 35% down payment, the total cost of purchase would be around CAD 154,000, or approximately €103,400.
4- FINANCIAL STRATEGIES THAT ARE NOT AVAILABLE IN FRANCE
One of the biggest advantages of buying property in Canada is access to a financing strategy that does not exist in France: Mortgage Refinancing.
This technique involves taking out a new loan based on the equity of the property—that is, the difference between its current market value and the remaining mortgage balance.
By refinancing your home, the bank could grant you a new loan of up to 80% of its estimated value, giving you access to additional credit to finance other projects—whether it’s purchasing another property or renovating your home to increase its value.
This strategy allows investors to leverage the value of their real estate assets to secure more funding from the bank, reducing the need to use their personal savings to continue investing.
5- RECORD-BREAKING APPRECIATION IN RECENT YEARS
As we just discussed, the refinancing strategy is particularly attractive in a real estate market where property values continue to rise year after year.
This has been the case in Montreal and Toronto, which have seen record appreciation in recent years for both single-family homes and condos (condominiums).
In Toronto, condo prices increased by 44% between 2017 and 2021, with an average annual rise of 13% since 2015!*
According to a study by Royal LePage, the Greater Montreal real estate market saw a record 20% increase between Q4 2020 and Q4 2021, while the Greater Toronto market experienced a 17.3% increase during the same period!*
Across Canada as a whole, the number of properties for sale has also reached record highs, as reported by the Canadian Real Estate Association*. In addition, property prices nationwide rose by 17% between Q4 2020 and Q4 2021*.
But it's not just property prices that are increasing—rental prices are also following this upward trend. This allows investors to cover their expenses more easily and maximize profitability.
In Montreal, the average rental price for an apartment reached CAD 1,300 in January 2022, marking a record increase since August 2021*.
In Toronto, the average rent for condos and apartments was CAD 2,444—a 17.7% annual increase—while for houses, it was CAD 2,961, representing a 23% rise, also in January 2022*.
6- ATTRACTIVE TAXATION
The sixth advantage of investing in Canadian real estate is its favorable tax framework, thanks to a bilateral tax treaty between France and Canada, which prevents double taxation.
According to the treaty*, property taxes on rental income must be paid in the country where the property is located.
For non-resident property owners in Canada, there are two taxation options:
Pay a flat 25% tax on gross rental income*.
File a tax return in Canada, declaring actual expenses. This option allows investors to deduct numerous expenses, reducing taxable income and ultimately lowering the tax payable.
Additionally, Canada allows property depreciation, which can significantly reduce property taxes.
7- A SECURE BANKING SYSTEM
Lastly, Canada boasts one of the safest banking systems in the world, making it an attractive destination for investors due to the low financial risk in the Canadian banking sector.
Canadian banks consistently rank among the safest globally, appearing in the Global Top 50 Safest Banks by Global Finance Magazine*, and in the Global Competitiveness Report by the World Economic Forum where it ranked 6th in 2019.*
The Canadian banking system is recognized for its stability, strong regulations, and sound management, making it one of the most reliable in the world*.
Are you eager to invest but hesitant about buying property remotely in a market you’re unfamiliar with? You know that even small mistakes can cost you a lot of money, and you want to be well-informed before making a decision? I can help!
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