Canadian Bounty

The country's weak dollar makes real estate here an extraordinary bargain

Canadian real estate brokers agree on three things: Property in Canada is beautiful, abundant, and—best of all—incredibly affordable for Americans. "Based on the exchange rate alone, American residents always get more here for their dollars than we do," says Stuart Kirkpatrick, president of the British Columbia Real Estate Association. Says Calvin Smyth, a Whistler Mountain area assessor, "The American dollar is so incredibly strong here. It's a real deal."

The abundance and beauty are no surprise, given that Canada has only 29.8 million people living on 3.8 million square miles of land. (In the United States, 265 million people live on 3.5 million square miles.) As Arlene Robinson, a realtor at Sutton Group Resource Realty on Vancouver Island, puts it, "Crowding is never an issue in Canada."

What is surprising is the price. The U.S.-Canadian dollar exchange rate is now around 50 percent, which means that for every U.S. dollar you get 1.5 Canadian dollars. That means property priced at one million Canadian dollars costs you only $661,000 American—and that's not likely to change much in the near future. Says Karl Merrill, owner of Charlotte Realty in New Brunswick, "Now is the time to capitalize on the weak Canadian dollar."

Canadian property prices are stable now as well. "There was a significant increase in prices in the 1980s," Kirkpatrick explains. "We went through an inflationary period, and prices just kept increasing. Interest rates skyrocketed as high as twenty percent on mortgages. It was a tough time for investors. Now prices are extremely stable. Inflation is down to very low numbers, if not less than one percent."

However, even with these advantages, few Americans look northward for land. Kirkpatrick has sold fewer than 10 houses to Americans in the past year, mainly to wealthy second- and third-home buyers from Florida and southern California, including a few Hollywood movie stars. (Recently Mel Gibson was looking to buy the 5,000-acre Douglas Ranch outside of South Kamloops, in British Columbia.) "They're looking for privacy, beautiful fishing, and a quiet lifestyle, so they tend to purchase out-of-the-way places," he says. "They want to get away from the rat race."

And some—like Robinson's American client who bought a 157-acre piece of property, including 4,900 feet of waterfront, for $3 million on Saltspring Island (off Vancouver Island)—want to escape the media. "Our reporters are more respectful of privacy," she says. "They leave people alone."

From a bureaucratic standpoint buying property in Canada is no harder than it is here. "As long as you don't become an immigrant, buying a home and land is as easy here for Americans as in the United States," says Robinson, "and it doesn't take long to complete the paperwork either." According to Kirkpatrick, it's even easier. "We do not have an escrow period on purchases," he says. "In the United States there are private land registry systems where you deposit your property title. In Canada we have central provincial and regional government land registry offices. The title pops up within hours of registering a claim, so the entire certificate of indefeasible title transfer—our equivalent of a deed—occurs right away."

In fact, whether you're Canadian or American, you face the same two main obstacles—the wilderness and the government—to buying land. The former is simply a matter of topography. Some areas, such as the northern parts of Saskatchewan and Labrador, are virtually uninhabitable. The latter is a fact of life: Great swaths of the country are owned and operated by "the Crown" and are only available for lease. (In reality the federal government owns all land, and title to property only gives you the right to use it, not actual ownership; in the United States a deed gives you real ownership.) The key, as an American, is to buy in locations easily accessible by automobile or plane, which means near the international airports in Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Montreal, and Halifax. The only other restriction nonimmigrants encounter is the amount of land they can purchase—although such limitations exist only on Prince Edward Island and in Alberta.

Property costs vary as much across Canada as they do across the United States. The price of an acre depends on the amount of arable land and the number of trees on it, its proximity to a city, and whether it includes lake- or ocean-frontage. Weather plays an especially large role. Duncan, in the Cowichan Valley of British Columbia, has the mildest, most even mean temperature and more hours of sunlight per day than anywhere else in the province. Hence property, whether bush or pasture, is valued much higher than in parallel areas that see less light per day.

But finding the best available locations isn't easy. "It works by word of mouth here," says Rosaire Cartier, president of the Chatham-Kent Real Estate Board in Chatham, Ontario. "No one wants to let the cat out of the bag." So I spoke with 25 realtors, real estate boards, and land assessors to find out where Canadians—and in-the-know Americans—go to buy luxury vacation homes. Here's what I found, traveling east to west. (Prices listed are in Canadian dollars.)


The Atlantic Provinces


The Atlantic, or Maritime, Provinces include New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland.

To reach the Atlantic Provinces by car from the East Coast, you must drive into New Brunswick via Maine. (Fredericton, the capital of New Brunswick, is about an eight-hour drive from Boston.) Or, you can take either the high-speed ferry from Bar Harbor (2.5 hours) or the overnight ferry from Portland (11 hours) to Yarmouth, Nova Scotia. Major airports are in Halifax, the capital of Nova Scotia, and Fredericton. "People generally don't buy vacation homes in Newfoundland because the terrain is so rough and rocky," explains Carole Kennedy of Brightside Realty in Charlottetown, the capital of Prince Edward Island. That's why we have not included it here.

New Brunswick "For luxurious homes, the best place to purchase is St. Andrews, along the northern coast," says Claire Saunderson of ReMax Group Four Realty Ltd. in Fredericton. "It's a small, seaside town, and the houses are old, large, and beautiful. A fair amount are owned by Americans. And prices here are so good. Single-family summer houses go for as little as $65,000, and mansions cost no more than $600,000—and I'm estimating high." Says John K.A. Pollard, a broker at Royal LePage Summit Real Estate in Saint John, the largest city in the province: "Prices for 'usual' St. Andrews residences would be in the $300,000 to $400,000 range, with many priced below these numbers and a few above."

But the attraction isn't just price, notes Merrill. "St. Andrews is located on a peninsula that juts into Passamaquoddy Bay. Due to the large off-islands the bay is somewhat protected from the colder Bay of Fundy waters and air. This means our summers are warmer and fog is less apt to remain for long periods of time." He adds that St. Andrews is a popular summer vacation spot because of the Algonquin Hotel and Golf Course, which is currently being converted into an 18-hole championship course with ocean views from nearly every fairway. It's also conveniently located—only 2.5 hours by car from Maine's Bangor airport and one hour by car from the airport in Saint John.

Many Europeans buy farmland in Carleton and York counties, the latter home to Fredericton, considered one of Canada's loveliest Atlantic cities. "Years ago we had Peggy Rockefeller as a client," Pollard says. "We tried to find her a farm on the shores of the Saint John River, but we couldn't get anyone to sell, even under the very generous conditions offered. At the moment, however, there are attractive properties on the rivers for sale, ranging from $200,000 to about one million dollars. In the Sussex area there are mainly dairy farms; between Sussex and Fredericton, crop farms. I know of one crop farm available that includes one hundred and seventy acres and costs only $349,000."

As for islands, Pollard says that Grand Manan, off the coast of Eastport, Maine, is "particularly unspoilt." The nine-by-four-mile-long Campobello Island, which is connected by a bridge to Lubec, Maine, and which is where Franklin Delano Roosevelt owned a summer cottage (now a museum), is another top choice. "Most of my buyers are U.S. citizens since the island's on the U.S. border," says Brenda Fitzsimmons, a sales associate at Coldwell Banker First Choice Realty in Welshpool, on the island. "I've sold to people from all over the United States—California, Colorado, Florida, Texas, Hawaii. Jerry Jones, the owner of the Dallas Cowboys, owns property here. There are lots of very wealthy investors and people who just want a nice, quiet place to get away to. Campobello is natural and unspoiled, never crowded or congested, with a moderate temperature of seventy-five to eighty degrees in summer. It is safe, clean, the people are friendly, and the fresh seafood is terrific." Prices are great too: $250,000, Fitzsimmons says, will buy you 12 acres on the ocean and a "beautiful home."

Nova Scotia It has 4,625 miles of coastline, "but the area around Chester is definitely the place to buy," says Joe Saunders, manager of Coldwell Banker Champion Realty in the town of Chester. "Americans have flocked here for the past one hundred and fifty years. They stay all summer long."

Located in the center of the south shore just below Halifax, the Chester area, known for its especially lush scenery, begins with Peggy's Cove and extends to Shelburne, known as the Lighthouse Route. According to Saunders, houses here—some of which are between 100 and 200 years old—range in price from $150,000 to $1.5 million. "At the upper end you're getting four or five bedrooms and a couple acres of land. But you can get a very beautiful three-bedroom house overlooking the ocean for $300,000." In particular, he hails the town of Lunenburg, which in 1995 had its Old Town section designated a World Heritage Site by the United Nations.

Fewer Americans, Saunders notes, have bought on Cape Breton Island, famous for its 181 miles of breathtaking Cabot Trail. "If you want a large home there, buy on Bras d'Or Lake," he says. "The lake is so large you think you're on the sea. And the houses are wonderful but very expensive." (They cost on average $575,000.)

"For $350,000 you can get an exceptional waterfront home on the Bras d'Or Lake," states Doug Phillips of Coldwell Banker David Butts Realty in Sydney. "I have a client who's selling her home for $800,000. It's three thousand square feet on sixty-five acres, just eighteen kilometers from the village of Baddeck. There's one thousand feet of water-frontage, a one-quarter-mile paved airstrip, an eighty-foot wharf, two guesthouses, a caretaker's house, three large barns, an in-ground pool, and a Roman bath and sauna. It needs a bit of maintenance, but it's well worth it."

As for finding a farm for sale on Cape Breton, Saunders says there's little hope. "There are very few," he explains. "You're better off going with the lakes."

Prince Edward Island Commonly referred to as PEI, it's the smallest Canadian province (just 140 miles long), joined to the mainland at New Brunswick by the eight-mile-long Confederation Bridge. It, too, is known for its beautiful beaches and world-class golf courses. "Many Americans own property here," says Carole Kennedy. "We attract a lot of movie stars during the summer. Marlon Brando has been seen here often. They tell us they like it because nobody bothers them. They have homes all over the place. It's very exclusive." But, Kennedy adds, "we have only so much available land, and water-frontage especially is at a premium. Still, there are nice properties for sale at reasonable prices."

PEI's Lands Protection Act forbids individuals from owning more than 1,000 acres; corporations or farms more than 3,000. ("Those who purchase land for speculative purposes are frowned upon," says J. Earle Arsenault, owner of Realty World Landmark in Charlottetown.)

Nonresidents who want to buy more than five acres of land with more than 165 feet of water-frontage have to receive permission from the Island Regulatory and Appeals Commission. The application fee is $2,080 or one percent of the purchase price, whichever is greater, and it takes approximately two weeks for the application to be processed. Nonresidents also pay an average of $1.50 per $100 of the assessed market value in annual provincial taxes (residents pay less). "But none of this keeps nonresidents away," Kennedy says.

If you want "the best house in the best neighborhood," says Kennedy, buy in the Brighton waterfront area of Charlottetown, "a popular area both with professionals and the old-money crowds." Queen Elizabeth Drive in particular, she adds, is "the address," followed by West Street. Large houses there tend to run $300,000 to $500,000. For a more secluded neighborhood, she recommends Keppoch, about five minutes from town, though waterfront property is more limited. The most private place is New London, which is on the northern shore. "Homes are rather expensive in New London," she says, "but you won't find many luxury homes with acreage—maybe three or four at the most. That's true wherever there's a bay."


The Great Lakes

No quibbling here among brokers: If you want to purchase the most exclusive lakefront property, it's not right on the Great Lakes but a 45-minute drive inland from Lake Huron's Georgian Bay, on one of three small lakes collectively referred to as Muskoka—Lake Muskoka, Lake Joseph (Joe), and Lake Rosseau (Ross)—and just two hours north of Toronto.

"It's the absolute prime location," says Cartier. "It's where the richest of the rich go." Helen McNabb, a realtor at Royal LePage Lakes of Muskoka, agrees. "It's no coincidence that we have something called Millionaire's Row here," she says. "We get lots of famous Americans. Goldie Hawn and Kurt Russell have a home here. Martin Short, Wayne Gretsky, the Eatons—I even heard that Tom Hanks was buying a place."

A considerable number of these homes are 6,000-8,000-square-foot "cottages" that were built in the 1800s and that sit on six to eight acres of land. Prices start at around $400,000, but quickly rise to one to four million dollars. As McNabb says, "Our prices are holding up well, same as in the late 1980s."

The reason so many flock here is the privacy: The shoreline is rocky (there are just a few sandy beaches) and dense with pine trees. "Because it's so well treed, privacy is guaranteed," says McNabb, "though we get a lot of boat traffic. It's a three-season place—people come in summer, fall, and spring. Lots come for the golfing. They sign up with the Lake Joseph Club, which is very exclusive."

According to McNabb the most luxurious neighborhoods are: the southern coast of Lake Joseph, with Port Sandfield being the prime location; the northern end of Lake Rosseau, because it's close to the town of Port Carling ("but get a southwest, open view to see the sunset," says McNabb); and Millionaire's Row and Beaumaris on Lake Muskoka, between Bracebridge and Port Carling.

The next best areas to consider are the towns of Port Hope and Cobourg on Lake Ontario, just over an hour's drive from Toronto. "We're the first two towns close to Toronto that aren't gobbled up by highways and McDonald's," says David Weir, a realtor at Royal LePage in Cobourg. "From the last part of the nineteenth century to the stock-market crash in 1929, affluent Americans came here to build huge homes. There was a ferry to Rochester in summer months. Unfortunately, many of the mansions were torn down in the 1940s, and the ferry was canceled."

Recently, Weir says, there's been a return of interest—especially in Port Hope, which has undergone major renovations. "Lots of older wealthy people are moving in here again. A few years ago a house was posted for $800,000, and it was worth every penny of it but sold for $600,000. The thing about this area is that houses don't go up for sale often." Prime addresses include King Street and Dorset Street in Port Hope and Fitzhugh Lane in Cobourg. Weir says that you can also find beautiful, large farms for sale between Port Hope and Rice Lake. North of the lake, he warns, you hit country that quickly turns into wilderness.

Other Great Lakes spots of interest for luxury property: the Caledon hills west of Toronto; Grand Bend, Goderich, and Bayfield on Lake Huron; St. Catharines, a half-hour from Niagara Falls; Niagara-on-the-Lake; Lake Simcoe; Collingwood on Georgian Bay, famous for its skiing; Belleville, Kingston, and the Thousand Islands on Lake Ontario; and Lake St. Clair, just 22 miles from Detroit.

Cartier adds that there are two places currently under development and worth looking into: Bob-lo Island, in the Detroit River near Windsor ("Land lots are selling for $300,000 to $400,000, houses for a million," he says); and Pelee Island, south of Windsor in Lake Erie, which is "just a hop to Cleveland. Pelee Island is our version of Martha's Vineyard. It's full of vineyards, and they've just started some preliminary development work."


Quebec Ski Country

"The biggest attraction here is Mont Tremblant," notes François Leger, president of Groupe Sutton-Laurentides, a real estate agency in Quebec, adding that the mountain is full of condominiums being sold to nonresidents. "The mountain received approximately $500 million in improvements and has changed dramatically over the last five years," he explains. "It's become a premier international destination. And because our average temperature is lower, our ski season is longer—although if you come in January, you may experience some really cold weather." Plus, Leger adds, Mont Tremblant is easily accessible. "All North American flights come into Dorval, a suburb just outside of Montreal, which is about an hour and a half from the mountain, and there are shuttle buses to the slopes."

Anthony Thomson, a broker at Coldbrook Realty in Knowlton, one hour outside of Montreal, says that the second-best ski spot after Mont Tremblant is the newer Mont Ste.-Anne, on the north shore outside of Quebec City. He also recommends smaller ski areas—in particular, Bromont, Sutton, Orford, Owl's Head, and Glen, which are all within 20 minutes of each other. "They are smaller than Mont Tremblant, but you have the pick of five hills plus Jay Peak in Vermont, twenty-five minutes away," Thomson says. "There are numerous Hollywood movie stars with places out there. Sylvester Stallone has a place, and so does Donald Sutherland. But there isn't much condo development going on. The person who buys around these hills usually wants acreage—farmland-type property. One hundred to two hundred acres is typical."


Alberta Ranches

"If you want to buy a ranch, especially a large one, Alberta's the place to look," says Dave Paris, a realtor at Royal LePage Realty in Cochrane, Alberta. "The whole province is full of them." Patrick Lindsay, executive officer of the Kamloops & District Real Estate Association in British Columbia, concurs. "You can find ranches in Saskatchewan and Manitoba," Lindsay says, "and the biggest ranch in North America is here in British Columbia. It's called the Gang Ranch, and Bill Gates was looking into buying it. But really southern Alberta's the best place to look for a cattle ranch."

The biggest drawback to buying in Alberta is the weather. Winter lasts six months and can be quite grim. Locals recommend staying within the Schinnok Belt, which extends 50 miles south of Calgary and 150 miles north of it. It's named for the warm Schinnok wind, which can bring temperatures from 20 degrees below to three degrees above zero Celsius in one day. "That means the snow melts and cattle have time to feed," Paris states "And it's so beautiful and clean—rolling hills, mountains, pines. There are lots of foreigners up here, but mostly Europeans. I haven't heard of Americans buying here, but they sure can."

"Americans are definitely buying in Alberta," says Arlene Robinson. "Some are farmers in the United States, others are wealthy people who have always dreamed of having a ranch or are into horses. They buy large parcels, to have the space to go riding. I'm dealing with a farmer from Red Deer, and he has an American bidding on his large farm. The farmer is planning to move south, to Vancouver Island, to get away from the cold."

The other big obstacle is the limit on the amount of land nonresidents can purchase. "Nonresidents can't buy more than twenty acres," says Richard Yoshimura, a realtor at ReMax West in Cochrane. "I've known some Americans who wait to get immigrant status so that they can get more land, but that takes time. The twenty-acre and larger parcels are getting rarer anyway.They are getting bought up by developers and turned into two-, four, and five-acre parcels." Says Kirkpatrick: "Most Americans don't come here to farm the land. If you buy more than five to ten acres, you've got work to do."

Ranchland prices, although generally low, have doubled in recent years. Four years ago, Paris says, a quarter section (160 acres) cost $250,000; today, that same land goes for $500,000. "They're grabbing up the land west of Calgary," he says. "It's getting hard to find there." Much of the land is government- owned, so you can only lease it.


The Canadian Rockies

Here's the difference between the Rocky Mountains in Canada and the United States: "Ours are the wide-open, almost entirely undeveloped Rockies," Kirkpatrick points out, "there to be discovered. Yours have already been captured."

The Canadian Rockies lie between British Columbia and Alberta and are accessible by plane from Vancouver and Calgary. Because the mountains are so undevel- oped, skiiers, according to Kirkpatrick, frequently steer clear of them altogether, opting instead for the slopes to the west in British Columbia. Says Lindsay: "There is just not much skiing in Alberta in general. The land gets flat so suddenly. You can let your dog go and watch him run away from you for three days."

If you are set on skiing the Rockies, Lindsay and Kirkpatrick say that luxury properties can be found in Invermere and Cranbrook, both of which are in the southeastern part of British Columbia, near the Alberta border.

On the Alberta side, the prime skiing locations are around Banff National Park, where Alberta's three main ski areas (Lake Louise, Sunshine Village, and Banff/Mt. Norquay) lie. However, property in the national park and the town of Banff is not for sale: It's owned by the government and can only be leased for up to 49 years at a time. There are also local "need to reside" regulations, which means that if you lease property you can't live in it full-time unless you work in the area. As a result, Robinson notes, "most Americans go to Banff only for a weekend." Says Deborah Hornsby, public information manager for the town of Banff: "Banff is not a retirement community. It makes much more sense to buy in Cranbrook."

Some sources recommend Canmore in Alberta for property. "Canmore is the most luxurious town where people buy houses," states Hornsby. "It's twenty kilometers from Banff National Park, about a half-hour drive to the nearest ski slope. Canmore's experiencing a housing boom now, and property values have gone way up." Yoshimura suggests buying in Cochrane as well. "There are four ski areas—Sunshine, Lake Louise, Nordic, and Kananaskis—within an hour of Cochrane," he says. "The skies are always blue, and the climate's very dry. It's also only fourteen kilometers from Calgary. As a result, a lot of the people building and buying houses in Cochrane are wealthy executives. Retirees are moving here too. There are some Americans, but mostly Canadians."


British Columbia

The attraction here is the waterfront, and the only difficulty in buying is that there is so much of it: 7,440 miles of coastline and 6,500 islands. The Sunshine Coast, the area around Vancouver, is said to have the best beaches in the entire country, which is why property here is also among the most expensive.

The nicest areas include Sechelt, which Kirkpatrick says is "beautiful and a growing number of Americans are purchasing there," and Gibsons. The nearby Gulf Islands, which include Galiano, Pender, Saturna, and Saltspring—the last-named the most densely populated, are, says Kirkpatrick, "gorgeous and very, very quiet." Another, Savary Island, has beautiful, unspoiled white beaches and, says Robinson, "fifty percent of the homeowners are Americans." Two of the favorite "undiscovered" Gulf Islands ("they're all discovered by now," says Lindsay) are Denman Island and Hornby Island, which has a permanent population of 1,000. "There are a number of very affluent Americans with outstanding homes on Hornby," says Robert Gee, a local realtor at Realty World Coast Country Ltd. "The community is quite eclectic, full of artistic, alternative thinkers."

Because building codes aren't enforced, the architecture on Hornby is eclectic as well. ("Features have been done on it in Better Homes and Gardens, London's Architectural Magazine, and the like," he says.) And the vegetation, sea, and beaches, he adds, are also "unique by Gulf Island standards. We have Gary Oak trees, Pacific Douglas firs, and aromatic Western cedars, as well as flowering cacti. The shoreline is moon rock and sandstone, with wide, mile-long expanses of white beaches. No other island has this wonderful combination."

For busier island life, many people choose southern Vancouver Island, around the city of Victoria. The island is one hour and 45 minutes by ferry and 30 minutes by plane from the city of Vancouver, which is on the mainland, or two hours by ferry and 30 minutes by plane from Seattle. Vancouver Island is often compared to Martha's Vineyard because of its small towns and abundant green, although it is much larger, 12,000 square miles versus Martha's Vineyard's 108.

The prime inland area on the mainland, notes Kirkpatrick, is "lakefront property on the Okanagan Lake near the town of Kelowna in the Okanagan Valley. It's at an absolute premium. Large mansions in Kelowna cost $600,000 and up." Lindsay also cites the Shuswap Lake, north of Kamloops, and the Kootenay Lake in the southeastern corner, just two hours from Spokane. "They're both popular for high-end property," Lindsay agrees. "Sun Peaks in Kamloops is popular for skiing. Prices are high, and the area is full of Germans."

Realtors agree that the best skiing near Vancouver is at Whistler Mountain, which includes one of the longest vertical drops of any ski resort in North America, and is just 75 miles northeast of the city. As Kirkpatrick says, "The skiing is phenomenal." But, he adds, it's also rather isolated. If you want to buy near the slopes, the only option is within the town of Whistler, where houses cost $500,000 to one million dollars on average. Squamish, the closest town, he says, "isn't a place where you'd want to buy; it's just a village." After that, the only other desirable location before you get to Vancouver is the small town of Lion's Bay, along the Sea-to-Sky Highway. "It's a little town," he says, "but you can find some high-end property there."

Other popular ski areas include Big White Mountain, near Kelowna in the Okanagan Valley (Lindsay: "In summer it has a very mild climate, much like southern California, and is full of estate wineries"), and the three north shore mountains—Cypress, Grouse, and Mount Sey- mour—which are all within a half-hour's drive of downtown Vancouver but, says Kirkpatrick, "are regional ski areas, not resort areas."


Taxes

Canadian real estate taxes are low and, says Guy Lussier, a notary at Lussier & Gagne General Partnership in Quebec, "when it comes to taxes, this, in particular, is a great time for foreigners to buy property here." In the past, he explains, "Americans bought tons of oceanfront property for nothing as an investment, in places like Nova Scotia. They would let it sit there, planning to pass it on to future generations. The government wanted to discourage this practice, so it created a nonresident purchase tax on vacant land. When foreigners bought land, they had to commit to building on it within two years or pay a thirty-three percent tax on it. But there were ways to get around it—and foreigners did, mainly by forming companies with Canadian friends who would hold the title to the land. In 1996 all that changed. The government decided it was time to promote the economy—so it got rid of the tax."

One of the best fiscal deals in British Columbia is buying property on the Agriculture Land Reserve (ALR), which means it has "farm" classification. Robinson had such a property that she sold for $1,197,000. "It's thirty-one acres on a lake with one thousand feet of lake-frontage," she describes. "It's totally private, with a Tudor home, cottage, and two barns. Because it's in the Agriculture Land Reserve the tax is only $2,165. If an American buys that and spends six months of the year there, he's still eligible for the $480 homeowner's grant deduction. If he's there for less, he simply pays the full amount." (If the home weren't on the ALR, the tax would have been around $10,000.)

There are 10 Canadian provinces, all with different laws and taxes, both provincial and municipal. Nine rule according to the common-law system used in the United States, while the 10th, Quebec, uses a system based on the Napoleonic Code. Here are the fiscal hurdles, all small, that you will have to leap over in the common-law provinces (see Quite Quebec for its taxes).

Federal Tax You pay the GST (Goods and Services Tax) only once, when you purchase property. "But if you buy property that's changed hands more than twice," Robinson explains, "it's considered an 'old lot property' even though it's vacant. In that case you do not pay GST. The same is true if you buy an existing house with one owner in it who's been there for more than six months."

The GST on property designated a new subdivision—meaning it is being sold for the first time and the buyer puts a brand-new home on it—is seven percent of the property's value. After you've lived in the house for more than six months (and thereby proven it's your principal residence), you are eligible for a rebate of 3.6 percent if the property cost less than $350,000; proportionally smaller rebates are applied to new homes which cost $350,000-$450,000. On homes which cost more than $450,000, there is no GST rebate.

One exception: When you buy a farm you pay GST on the land and equipment, regardless of whether it's been occupied for more than six months.

Provincial Taxes They vary widely. In British Columbia there's a one-time purchase tax called the Property Transfer Tax (PTT), which amounts to one percent on the first $200,000 of the purchase price, and two percent on the rest. Another, the "change of use" tax, is paid only when property is rezoned. Some areas, such as northern British Columbia, Manitoba, and Saskatchewan, have odd levies, such as the wolf-bounty tax and fence tax.

One reason to buy in Alberta is that there's no provincial sales tax, the result of the province's extensive oil revenue. "In fact, we probably have the lowest taxes in all of Canada," says Yoshimura.

Municipal Taxes They're higher in cities because property values are higher. Municipal taxes are billed once, in January, but are paid one year in advance on a prorated basis in two or three installments. That means that if you buy on October 30, you only pay November and December tax while the seller pays the previous 10 months' worth.

Local tax bills are sent either to your home or to your Canadian bank, which deducts the money from your account. For Americans who spend only part of the year in Canada, paying through the bank is convenient since large Canadian banks have branches in the United States.


Residency Issues

If you stay in Canada for six months or less each year, the government considers you a tourist, or nonresident. (Americans don't need a visa to enter the country.) That means you can do just about anything—open a bank account, buy land or a car, purchase stocks and bonds—except vote. (Even as a resident you can't vote unless you also have Canadian citizenship.)

If you live in Canada for more than six months annually, you have to apply for immigrant status or working authorization, the Canadian equivalent of a Green Card. The paperwork (various background checks) normally takes six months to one year. As a result, Robinson says, "a lot of Americans don't go through the immigration hassle, even if they are coming here to retire." Rene Mercier, spokesman for Citizenship & Immigration Canada, puts it more plainly: "If you're only planning to come for a few months each year, you cannot legally become an immigrant."

Americans who live in Canada for more than half the year but who don't want to apply for working authorization simply leave Canada every six months. Each time they return, the six-month "tourist" period begins again. Others, instead of crossing the border by train or plane, which records their arrival, come by car. "When you drive across the border, officials usually just ask you how long you plan to stay," Robinson says. "If you say less than six months, they let you go by without any hassle. Some people say less, but then stay for a year without leaving. Most times the government never finds out, unless you get a traffic ticket or something." And, adds Mercier, "There's no limit on the number of times you can go back and forth across the border."


A Real Deal

For nearly 15 years Canadian residential real estate experienced a boom. Then in 1994 a national recession hit, causing interest rates to escalate, job growth to stagnate, and home purchases to decline almost overnight. Today the real estate market still hasn't recovered, making it a great time to buy.


Building Costs

Residential property prices in Canada vary as widely as the terrain. Here is how they averaged in December 1998, from the most to least expensive.
Greater Vancouver, British Columbia Average Price: $257,626
Toronto, Ontario Average Price: $215,132
Victoria, Vancouver Island, British Columbia Average Price: $210,693
Calgary, Alberta Average Price: $159,960
St. Catharines (Niagara Falls), Ontario Average Price: $134,722
Halifax, Nova Scotia Average Price: $119,240
Montreal, Quebec Average Price: $118,240
Saint John, New Brunswick Average Price: $92,947
Source: Canadian Real Estate Association


Quite Quebec

Quebec is always trying to do things differently, and that's no less true when it comes to real estate. "But this doesn't mean it's more difficult for Americans to buy in Quebec," says Guy Lussier, a notary at Lussier & Gagne General Partnership in Quebec. "It just means that we have different procedures for doing things." Here's what you need to learn.

Provincial Real Estate Taxes There's a one-time real estate purchase tax called the Welcome Tax, named after Michel Bienvenue, the ex-minister of finance, who proposed it. It amounts to 0.5 percent on purchases up to $50,000, one percent from $50,000 to $250,000, and 1.5 percent above $250,000. "We used to welcome new neighbors with baskets of fruit," Lussier laughs. "Now we welcome them with a tax. A municipality on the south shore wanted to create a farewell tax too, for people selling property, but it was defeated." But even this tax seems fairly easy to avoid: As Lussier notes, property owners frequently get out of paying it through the 17 different exemptions a buyer can claim, including various farming exemptions, of which many nonresidents take advantage.

Provincial Sales Tax The Quebec Sales Tax, or QST, is 7.5 percent of the combined value of the GST and the property value. That means that on property that costs $100,000 you pay $15,025—$7,000 in GST and 7.5 percent of that $107,000, or $8,025, in QST. But the QST is applied only if the house is new or if the land is being purchased from a developer or a business. QST is not just paid on property, either—it's paid for any service or goods, including your notary's services. "Even when the plumber comes to your house," says Lussier, "he automatically adds 7.5 percent for the QST."

City Taxes They vary from 40 cents to $1.50 per $1,000 Canadian. In some areas of the province you also have to pay separate sewer and water tax bills, which usually run about $200 to $250 per house, as well as school taxes.

The Legal Work In the rest of Canada, hire a lawyer to do the paperwork; in Quebec, go with a notary. "The notary's paid by the buyer through the closing cost," says François Leger. "This would usually be between one-half and one percent."

Québecois notaries have law degrees and must, by law, represent both the buyer and seller in the same transaction. They make one notarized deed and then issue certified copies to the various parties. "You can ask a lawyer to do a deed of sale," says Lussier, "but only a few are able by law to do it. Most don't like to anyhow. And only notaries can sign mortgages. As a result, about ninety-seven percent of all deeds are done by notaries." (Lussier also explains that when a notary draws a will in Quebec, the will is valid as soon as the bearer passes away; if a lawyer draws it, it must be probated in court, which takes approximately six weeks.)

Expect to pay the notary from $150 to $200 per hour in Montreal, $100 per hour outside. These fees are also subject to GST and QST. "On a deal for a house that costs $500,000, which takes one year or less to complete, a notary would be paid around $1,500 to $3,500," says Lussier. "But rates don't vary much according to the value of the property."


Buying B.C.

Fees on buying property vary from province to province. Here's what you pay on a $500,000 home in British Columbia, which has, on average, the most expensive real estate in the country.

Federal Goods and Services Tax (GST) $35,000 (7% of value; paid one time only)*
Provincial Property Transfer Tax (PTT) $8,000 (1% on first $200,000; 2% on any value thereafter)
City Taxes $5,000-$7,500 (1-1.5% of appraised value of property; prorated; paid annually)
Realtor $18,000-$23,000 (6-7% on first $100,000; 3-4% on balance)
Lawyer $1,500, including mortgages and deeds
Deeds at Land Registry $50 (transfer fee alone); $100 (with mortgage)
Land Survey $250-$275; for large farms, $5,000-$8,000; not mandatory.
House Inspection $250-$300
Property Maintenance $500 a month for a caretaker; 10-15% of rental income for a property-management firm
Home Insurance $500-$1,000
*GST is paid only on new property.
Source: British Columbia Real Estate Association


Gaining Interest

If you decide to sell your Canadian home, you'll have to pay Canada's federal capital gains tax, which, says Stuart Kirkpatrick, "is an income tax, not a property tax." That is, you pay the tax if it's your second or third home; if it's your principal residence, you may be exempt through the "principal residence exemption."

"When the principal residence is on 1.25 acres of land or less, the full amount of the capital gain is exempt from tax," says Tony Lobmeier, an accountant on Vancouver Island in British Columbia. "When the property is on more than 1.25 acres the issue becomes clouded and professional advice should be sought to determine how much of the land may be eligible for the exemption. If a U.S. citizen owns a principal residence in Canada for ten years but actually lives there for five, he can only claim the exemption on one-half of his capital gain."

Here's how it works. As a nonresident, you must pay a withholding tax to Revenue Canada when you sell your Canadian property. If you don't expect to owe any tax, you file for a clearance certificate. Until you receive such certificate, the lawyer or notary handling the sale will withhold 33.3 percent of the capital gain. On average it takes about three months to receive the certificate, although, says notary David Wright, "it's occasionally faster." If you don't apply for the certificate, the buyer must withhold 33.3 percent of the gross proceeds of the sale.

Nonresidents are also required to file a Canadian income tax return during the year the property is sold. Such return calculates the actual amount of tax due, which, says Lobmeier, "will depend on the amount of capital gain and can range from twenty to thirty-eight percent. Generally, if you have a gain of $40,000 or less, you pay twenty percent. The withholding tax paid at the time of the sale is applied against the tax paid with the return, and any difference is refunded to or paid by you." Says Quebec realtor François Leger: "The notary or lawyer is instructed to hold any increase in sale price until the seller fills out his income tax return. If he claims no capital gains, which is usually the case now, then he gets all the money back."

Even after you pay Canadian capital gains tax, you are still subject to U.S. income tax on the property. However, thanks to the U.S.-Canadian Tax Convention agreement, you will get a tax credit for any income tax paid to Revenue Canada. "And because Canadian income tax rates tend to be somewhat higher than U.S. rates," Lobmeier explains, "there generally won't be any net U.S. tax payable."

As the seller you also usually have to pay broker's fees, which, according to Wright, are approximately six to seven percent of the first $100,000 of the sale price, and two to four percent of any value above that. (In Quebec the commission is a flat fee of five to seven percent.)

Those broker's fees are also subject to tax. "You're charged a seven percent Goods and Services Tax on broker's fees in British Columbia," says Wright. "Most eastern provinces have the Harmonized Sales Tax, or HST, which is a combination GST-provincial sales tax and amounts to fourteen percent." In Quebec that figure is 15 percent, according to Leger. "So if someone sold a $200,000 home in Quebec," Leger explains, "assuming a six percent commission rate, he would have to pay $12,000 in broker fees, plus fifteen percent of that, or $1,800. All together it would be about $13,800."


Getting Started

Buying property in Canada isn't difficult—as long as you hire the right people to help you do it. Here are some things you need to know.

Legal Matters
Hire a lawyer, not a notary—unless you're buying in Quebec, then you should hire a notary instead (see Quite Quebec). Arlene Robinson, a realtor at Sutton Group Resource Realty on Vancouver Island, explains that a lawyer can be sued if he messes up the title search or if something goes wrong on the property. "And he has to fix the problem for free," she says. "This is called a guaranteed title system. You don't have it in the States. That is why ours is a safer, better transfer system. If a notary makes a mistake, tough luck because notaries aren't held accountable if they steer you wrong."

Find a lawyer who's specialized in real estate law, tax law, and nonresident issues, and who works in the area where you want to buy. According to Stuart Kirkpatrick, president of the British Columbia Real Estate Association, "Your lawyer should be near the property or the land registry office where you're registering the property. The best way to find one is by asking your realtor or bank." Once you have a few names, Robinson advises, "shop around. Tell them the value of your house and mortgage and ask them how much they'll charge." In British Columbia, Robinson says, lawyers charge on average $1,500 for a $500,000 house, including mortgage and deeds.

Mortgages
In Canada mortgages have various term limits. "You can have a term limit from six months to ten years," Kirkpatrick explains, "each with a different interest rate attached. When the term expires, you must negotiate a new term with what may be a new rate. But rates have been low for quite a while, and the likelihood of that continuing is quite good." (Currently, six to seven percent is average.)

"These are the lowest rates in the past thirty-two years," states Barry Ballantyne of The Mortgage Centre in Owen Sound, Ontario, a franchise with 38 offices coast to coast (for information, see their Web site at www.mortgages-canada.com), which offers only five- or ten-year mortgages. "It's making owning a home less expensive than renting one." Ballantyne also adds that the Mortgage Centre's application process is easy. "Once a complete application is submitted to a bank," he says, "there's usually an answer within one day—and quite often within four hours." In general, banks expect foreigners to put 35 to 50 percent down. According to Ballantyne, "Sixty-five percent loan to value is a good rule."

Realtors
Realtor fees, half of which are often paid by the buyer, can run six or seven percent on the first $100,000 and two to four percent on the balance; in Quebec it's a flat fee of five to seven percent. "But it depends on how much work is involved," Robinson notes. "For a dairy farm I charge a flat five percent rate since I have to sell the property, equipment, and animals."

You can find local realtors through large American agencies with Canadian branches, including Sutton Group, Coldwell Banker, ReMax, and Century 21; through the Web site of the Canadian Real Estate Association (below), an umbrella organization representing 114 real estate boards and 10 provincial associations; or through one of the local real estate associations listed below.

The Canadian Real Estate Association
344 Slater Street, Suite 1600
Ottawa, Ontario, K1R 7Y3
613-237-7111
www.mls.ca
info@crea.ca

The Alberta Real Estate Association
Suite 310, 2424 4th Street S.W.
Calgary, AB, T2S 2T4
800-661-0231; 403-228-6845
www.abrea.ab.ca

British Columbia Real Estate Association
Suite 309-1155 West Pender Street
Vancouver, BC, V6E 2P4
604-683-7702
www.bcrea.bc.ca
bcrea@helix.net

The New Brunswick Real Estate Association
358 King Street, Room 301
Fredericton, NB E3B 1E3
506-459-8055
nbrea@nbnet.nb.ca

Nova Scotia Real Estate Association
7 Scarfe Court
Dartmouth, NS, B3B 1W4
902-468-2515

Ontario Real Estate Association
99 Duncan Mill Road
Don Mills, ON, M3B 1Z2
416-445-9910
www.orea.com

info@orea.com
Prince Edward Island Real Estate Association
75 St. Peter's Road
Charlottetown, PE, C1A 5N7
902-368-8451
peirea@pei.sympatico.ca

Fédération des Chambres Immobilières du Québec
600 Chemin du Golf
Ile-des-Soeurs, QC, H3E 1A8
514-762-0212
fciq@cigm.qc.ca


Realtors Quoted In This Article

Alberta
Dave Paris, Royal LePage Bow West; 403-932-2101; bowwest@royallepage.ca • Richard Yoshimura, ReMax West; 403-932-4433; yoshimurarealtor@nucleus.com

British Columbia
Ray Blender, ReMax Camofun; 250-744-3301; rayblender@qualityservice.com • Robert Gee, Realty World Coast Country Ltd; 250-335-2482; pgeerwis@comox.island.net • Stuart Kirkpatrick, MacDonald Realtors; 604-594-8266; stuartk@pro.net • Patrick Lindsay, Kamloops Real Estate Association; 250-372-9411; plindsay@kadrea.com • Arlene Robinson, Sutton Group Resource Realty; 250-748-5000; ajrobins@island.net

New Brunswick
Brenda Fitzsimmons, Coldwell Banker First Choice Realty; 506-752-2239; brenfitz@campnet.nb.ca • Karl Merrill, Charlotte Realty; 506-466-4324; kmerril@nbnet.nb.ca • John Pollard, Royal LePage Summit; 506-658-5823; jkap@nb.simpatico.ca • Claire Saunderson, ReMax Group Four Realty Ltd.; 506-452-9888; remax1@nb.sympatico.ca

Nova Scotia
Doug Phillips, Coldwell Banker David Butts Realty (Cape Breton Island); 902-539-7430; doug.phillips@ns.simpatico.ca • Joe Saunders, Coldwell Banker Champion Realty; 902-275-3504; chester@coldwellchampion.com

Ontario
Helen McNabb, Royal LePage Lakes of Muskoka; 705-765-6855; htmcnabb@muskoka.com • David Weir, Royal LePage; 905-885-9921

Prince Edward Island
J. Earle Arsenault, Realty World; 902-628-6500; rwlandmark@pei.sympatico.ca • Carole Kennedy, Brightside Realty; 902-894-5501; carole@pei.sympatico.ca

Quebec
François Leger, Groupe Sutton-Laurentides Realty; 450-227-2611; fleger@sutton.com • Anthony Thomson, Coldbrook Realty; 450-243-0193; athomson@acbm.qc.ca