1. Canadian land tax system
The characteristics of Canada's tax system are mainly reflected in two aspects: first, the liberal government, which has been in power for a long time, has been implementing the tax policy of just Keynesian countries intervening in the economy; Second, in the balance of the two tax principles of fairness and efficiency, successive Canadian governments have been more inclined to the development and maintenance of fairness and welfare state. After 1990s, the main goal of tax reform in Canada is to promote tax equity and reduce tax burden.
The local tax system is a complex system containing multiple taxes, including both central tax and local tax. There are both property taxes and income taxes; There are both personal tax and corporate tax. In addition, it is also related to inheritance tax, inheritance tax and gift tax. Generally speaking, the land tax system is a tax system based on land. Land includes agricultural land, residential land, business land and forest land. Canada's land tax system mainly includes two aspects: ① land tenure tax; ② Paid land transfer and value-added tax.
Land is the foundation of all things and the source of human wealth creation. Land tax used to regulate land resources is the oldest form of land rent. Canada began to collect land tax as early as 1873, and later countries followed suit. As land is a major real estate, the land tax in Canada is merged into the real estate tax. When residents buy a house, they also buy land, so real estate such as houses and buildings are also included in the tax scope. Therefore, the tax base of real estate tax in Canada includes two parts: one part is land, and the other part is real estate such as buildings. This tax is an important part of Canada's current tax system, which has played an important role in increasing fiscal revenue, promoting the effective use of land and regulating the differential income of land. Real estate tax accounts for a considerable proportion of the fiscal revenue of the Canadian municipal government, generally accounting for 30% ~ 40% of the city's fiscal revenue, and even higher in some cities, such as Vancouver, accounting for about 58.4% of the total fiscal revenue.
Canada has accumulated many years of experience in land taxation, and has mainly determined the following four principles: First, the principle of fairness. In Canada, no matter who pays taxes according to law, people with high incomes have to pay more taxes. Second, the principle of openness, in the federal or provincial and local councils have the right to determine land taxes and fees, solicit opinions from all walks of life, and strive for fair and just taxation. Thirdly, it is mainly embodied in the principle of fairness in the assessment of taxable property, which requires tax assessors to be close to the market level in their own assessment results, while excessively deviating from the market level is regarded as incompetent and in danger of being dismissed. Taxpayers can object to the evaluation results and have the right to request revision. Fourthly, according to the principle of taxation by stages, the land retention and circulation links are taxed respectively. Taxation on land ownership includes taxation on land ownership and lease, while taxation on land transfer includes taxation on the transfer itself and the value added during the transfer.
2. Taxes and collection methods
Canada's real estate tax can be divided into several types, mainly including: ① real estate tax, which is paid by real estate owners on time every year; ② Real estate transfer tax; ③ Commercial real estate tax, etc.
Real estate tax is a local tax, which is levied by provincial and municipal governments according to law, and all the income is used for local budget expenditure. Usually, the municipal government is responsible for taxing the real estate in the urban area, and the provincial government taxes the real estate outside the urban area. Governments at all levels collect real estate taxes from real estate owners every year, and usually issue tax notices several times a year, such as Ontario, which requires them to pay taxes within a time limit. In addition, all provinces and cities should also levy a medium-level transfer tax on the transfer of real estate, which should be paid by the buyer when handling the transfer of property rights.
Provinces and cities also levy business real estate tax, which is an additional real estate tax for non-residents and the second largest tax source for local governments. It is different from real estate tax. Commercial real estate tax is a tax levied on real estate owners rather than everyone. The determination of commercial real estate tax base is usually the estimated value of real estate tax and the total annual rent. Specifically, it includes five forms: according to a certain proportion of real estate assessment value; According to a certain proportion of the total value of lease evaluation; Expropriation by area; Determining the storage capacity according to the storage capacity; According to a certain proportion of total operating income.
In addition to the general real estate tax, all provinces have authorized city governments to levy special taxes or fees to make up for the shortage of public facilities expenditure of local governments.
The way of collecting real estate tax in Canada is ad valorem, which is mainly based on the value or price of land and corresponding buildings. All provincial governments take the property value as a percentage of a certain base year. Usually it is the price determined by the buyer and seller of the real estate in the transaction. However, due to different revaluation intervals, different base years and different valuation methods, the valuation of the same property will be different. In some provinces, the estimated tax payable is calculated by the product of various factors specified by the province. The main purpose of adopting this method is to limit tax transfer. In most provinces, agricultural taxes adopt more favorable valuation standards.
Real estate tax based on the wealth of real estate owners is actually a means for local governments to allocate expenditures among taxpayers. All provinces adopt school district tax rate to raise income other than provincial government transfer payment. The implementation of tax rates in school districts varies from province to province. All provinces levy property tax in urban unorganized areas, and the property tax levied at the provincial level has increasingly become an important means to raise education funds.
In order to compensate the municipal government for the loss of tax exemption for all government property, the Canadian federal government and the provincial government paid the municipal government a property transfer subsidy. Some provinces also give corresponding subsidies to schools, universities and public hospitals for property tax exemption.
3. Determination of tax rate
Most real estate taxes in provinces and cities are levied at different tax rates to curb the widening gap between the rich and the poor. For example, the real estate tax rate in Vancouver ranges from 0.3% to 15%, which is quite different. Demobilized soldiers, owners of self-occupied houses, elderly people over 65 years old and disabled people can enjoy the tax rate of 0.3%; The tax rate paid by real estate speculators and renters ranges from 10% to 15%; Impose a higher tax rate on people who own two houses. Whether the house can be rented out or not, the owner has to pay taxes according to the regulations every day. Vancouver city government evaluates real estate once a year. The evaluation is presided over by the government, and the cost is also borne by the government. The process and principle of evaluation: firstly, land classification is carried out to determine the land category of real estate; Secondly, fill in the land use category and determine the tax rate according to the purpose; Third, the improvement of public facilities, including libraries, swimming pools and sports venues; Fourth, the location of real estate is far from hospitals and schools, as well as the education level of schools and the treatment level of hospitals; Fifth, it is the convenience of transportation, whether there is public transportation (public electric vehicles) and road conditions. And evaluate the real estate price according to different situations and determine the tax rate. Local taxes are levied according to the overall evaluation, not according to the land per square meter, but according to the percentage of the overall evaluation of land and housing.
The tax rate of real estate transfer tax varies from province to province, such as New Brunswick, Canada, where the real estate transfer tax is levied at 0.25% of the real estate transaction value. Ontario collects land transfer tax. According to the Ontario Land Transfer Tax Law, the tax rate fluctuates between 0.5% and 2%, and the specific tax rate depends on the transfer price and the purpose of land use. All transferred property (including commercial or industrial land) with a value of less than 55,000 Canadian dollars (including 55,000 Canadian dollars) shall be taxed at 0.5%; When the value is more than 55,000 Canadian dollars, but less than 250,000 Canadian dollars (including 250,000 Canadian dollars), it will be taxed at 1%; When the value exceeds 250,000 Canadian dollars, it will be taxed at 1.5%; For the transfer of single-parent family property with no more than two people, when its value exceeds 400,000 Canadian dollars, an additional tax of 0.5% will be levied on the excess.
According to the Contract Tax Law of Kaya City, Nievas, townships, towns or townships are allowed to formulate detailed rules to levy local land transfer tax at 0.5% of the value of the transferred property. About13 towns collect this tax. According to the special provisions of Harley Fix, the contract transfer tax is levied at more than 2%, but the current tax rate is 1.25%. Quebec City's land transfer tax law stipulates that municipalities directly under the central government are allowed to levy taxes on real estate in urban areas by formulating detailed rules. The tax rate is 0.3% when the selling price is less than 50,000 Canadian dollars, and 0.6% when it exceeds 50,000 Canadian dollars. Transfer of public areas, agricultural land and forest land can enjoy tax exemption. In order to encourage housing construction, Quebec stipulates that if the government sets up subsidy funds and real estate reserves, it can cancel the land transfer tax.
Canada's taxation of land transfer by non-Canadian residents sometimes increases productivity. For example, in Quebec and Ontario, a certain type of land is transferred to a non-resident or non-resident holding company, and the real estate transfer tax should be re-levied. Take Ontario as an example. In general, non-residents and residents should pay the same land transfer tax rate. However, if a non-resident purchases an agricultural or recreational property, the land transfer tax rate is 20%. But these land transfer taxes will have a large number of tax exemptions.
In addition to the above taxes, the transfer of real estate, including the sale of real estate, also involves the following taxes: ① the transfer of income tax involving capital gains. When the seller sells the property, the value-added part of the sales proceeds shall pay income tax according to the regulations; (2) The income tax on rental income is the tax payable when the rental income of the house is included in the annual income; (3) Goods and Services Tax (GST) can be exempted in many cases, such as second-hand houses.
In addition, there are non-resident withholding taxes in Ontario, that is, the income of non-residents in Canada, such as wages, interest, bonuses, rents, royalties, agency fees, etc. , subject to 25% withholding tax. According to the tax treaty between Canada and relevant countries, this tax may be reduced.
Second, the Canadian real estate industry
Legal guarantee of real estate transaction
Canada's real estate market is very mature and perfect, and the corresponding legal system is relatively complex and sound. Take Ontario as an example, the laws involved include: contract law to ensure the legality of contracts; The Law on Real Estate and Commercial Brokers is a professional law to manage real estate and its agents and regulate commercial behavior. The Business Conduct Act is a federal law that regulates specific business practices such as advertising and sales promises. Land transfer tax, which stipulates the collection of land transfer and other taxes; Expropriation law, regulating the procedures and compensation laws for the government to expropriate private land; Competition Law, regulating commercial competition; The income tax stipulates the tax issues related to the income from the sale of real estate; Indigenous land law, which is specially used to protect the land of indigenous Indians; The Registration Law is a property right registration law, which has the same effect as the Land Ownership Law. Zoning according to law is a land planning law; Building regulations, which are regulations for building new houses; Fire protection laws and regulations, which stipulate the fire protection standards of existing houses; Agency law and professional agency regulations; The Tenant Protection Law clearly stipulates the rights and obligations of both parties to house leasing, mainly to protect the interests of tenants.
In Canada, the property right of land comes from the commercialization of crown patent, which can be privately owned, which may be one of the biggest differences from China's housing property right. In Canada, in addition to real estate that can be freely traded in the real estate market, there are mainly two special land use and management that deserve attention.
1) Native Lands: Reserved land reserved by the government to protect the rights and interests of Indian aborigines and land use.
2) Some plots of some land belong to reserved official land, and there will be certain restrictions on land use, such as the development and utilization of mineral resources, the management of trees on the land, and even a part of some land will be reserved for future highway construction. In this way, restrictions on the use of land and real estate are often encountered when developing plots, which will have a direct impact on the value of real estate.
2. Government departments in charge of real estate transactions
In Canada's real estate transactions, the government is only responsible for the management of property registration, and its management department is the government real estate registry, and all provinces or municipal governments have such institutions. For example, the property registration and management of real estate in Ontario is the responsibility of the Real Estate Registry of the Consumer and Business Services Department. The Government Real Estate Registration Bureau is similar to the Land Resources and Housing Administration of China, and holds the information of all real estate in its jurisdiction. Most of this information is public, and any individual or unit can find the needed information with little money. All the information of lawyers' property right investigation is obtained from here. At present, the real estate registration offices in many provinces and cities in Canada have realized computer management. Lawyers can obtain property right investigation data and property right registration through computers without leaving the lawyer's building. For example, there are two kinds of property rights registration management systems in Ontario at present: ① registration system: all kinds of property rights related documents are registered and filed according to the provisions of the registration law; (2) Land ownership system: a real estate rights registration management system that ensures no mistakes under the norms of the land rights law. Through these systems, we can inquire about the land property rights in Ontario.
3. Real estate transaction intermediary
Canada is vast and sparsely populated. At present, a large number of new immigrants from all over the world move here every year, especially in some big cities. With the continuous development of the city, the housing market is very active. Buying and selling houses is like buying and selling commodities. According to the change of supply and demand, the price of real estate is also changing, so not every real estate investment will definitely have a good return. In addition to their unique vision, it is essential to seek the help of real estate professionals. Real estate agents are professional service personnel with abundant information resources, good reputation and mature experience. They can help you analyze the planning, choose the appropriate geographical location, investigate the community environment, analyze the investment development trend, grasp the investment hotspots, help you determine the opportunity to enter the market, minimize risks and increase income. According to the statistics of the Canadian Association of Realtors, on average, more than 85% people buy and sell houses through brokers.
In Canada, brokers are managed by provincial and municipal brokers associations. Brokers have to go through rigorous examinations, training and pay a certain membership fee before they can become members of the association. Brokers can obtain corresponding grades after different examinations, and the highest grade can set up a brokerage company independently. The association has its own website, the information is updated quickly, and all members can log in.
4. Basic procedures for real estate transactions
At present, the real estate transaction process in Canada is basically the same as that in other parts of North America. A trading procedure generally needs to involve the following procedures and related personnel.
(1) Looking for a real estate agent
If someone has the idea of buying a house, they will generally seek the help of a professional real estate agent through friends or advertisements. Brokers play a very important role in real estate transactions.
(2) Ask the house inspector.
Once the buyer and the seller sign the contract, if there is a house inspection clause in the contract, the buyer should ask the government registered house inspector to inspect the house at the specified time. Generally speaking, the house inspection clause means that the contract can only take effect after the house inspection. The house inspector will issue a written house inspection report. If there is no problem with the house, the buyer will continue to perform the contract. Otherwise, the buyer can give up the contract or bargain with the other party.
(3) Loan financial institutions
If there are loan clauses in the contract, the buyer should also go through the loan formalities at the financial institution within the specified time. The loan terms are generally similar to the house inspection terms. Financial institutions will decide whether to lend to the buyer according to the regulations of the institution and the repayment ability of the buyer. If the financial institution agrees to the loan, the buyer must continue to perform the contract, otherwise, the buyer can abandon the contract. Customers of Canadian financial institutions generally come from direct door-to-door service, and many of them are introduced by loan brokers and loan brokers.
(4)*** Property management certificate (status certificate)
If there are clauses about the property management certificate in the contract, the buyer should also ask a lawyer to review the property management certificate within the specified time. Xxx property management certificate refers to the contract that the buyer's lawyer examines and approves XXX property management certificate within a certain period of time. Certificates are generally issued by property management companies, and the fees range from 100 to 150 Canadian dollars. Buyers and sellers can negotiate, usually the seller pays. According to the Property Management Law, the contents of the certificate include the operating status of the property management company, whether there are legal disputes, financial status, whether the owner (seller) owes money and legal disputes, and so on. This certificate is applicable to the property with a property management company. If the property or property management company has major legal or financial problems, the buyer can cancel the contract or bargain with the other party again.
As can be seen from the above, if there are no very special circumstances, the owners will generally not default on the payment and abide by the regulations of the property management company, otherwise there will be a lot of trouble when selling the property, or even it will not be sold.
(5) Lawyers of the Buyer and the Seller
The buyer usually hires a professional real estate lawyer before or after signing the contract. However, according to Canadian law, the buyer and the seller must hire their own lawyers to handle the transfer procedures. So you can buy and sell a house in Canada without a broker, but it is almost impossible to hire a lawyer.
After accepting the entrustment, the buyer's lawyer should carefully check the contract and conduct a series of investigations. These surveys are generally divided into property rights surveys and non-property rights surveys.
It is easier to represent the seller's lawyer than the buyer's lawyer. The main task of the seller's lawyer is to answer and solve the problems found and raised by the buyer's lawyer. If there are few or no problems with the property, the work of the seller's lawyer is relatively simple and direct. If there are many or serious problems, the seller's lawyer will face a very difficult job to ensure that the transaction is completed on time.
When the seller's lawyer receives the buyer's lawyer's request letter and the documents that need the seller's signature, he must read them carefully. The seller's lawyer must be proficient in the terms of the contract and the laws related to the sale of real estate, so as to answer the demand letter correctly.
On the delivery date, the seller's lawyer or his assistant will exchange documents, house payment and keys with the buyer's lawyer or his assistant at the appointed time, and then the buyer's lawyer will be responsible for registration. The seller's lawyer can only pay the house payment to the seller after the buyer completes the registration.
After delivery, the seller's lawyer also needs to cancel the seller's previous loan mortgage and issue a summary report to the seller.
(6) Registration of property rights
After the real estate transaction is completed, the property rights must be registered at the local government real estate registration office. At present, due to the computer management of the government real estate registration office, lawyers of both parties no longer need to go to the registration office in person, but exchange documents through courier companies and register online.
From the whole process of real estate transaction in Canada, every step is completed by relevant professionals, and the division of labor is meticulous, which avoids conflicts of interest and fully protects the interests of buyers and sellers and lending institutions.
5. Government preferential policies in Canadian real estate transactions.
Canadian residents have some preferential policies when buying a house. For example, in Ontario, there are the following preferential policies for first-time buyers:
1) Land transfer tax refund. Buyers who buy a new house for the first time in Ontario and mainly live in this house can get a tax refund (implemented from August 1996).
2) Provincial Housing Savings Subsidy Plan. The purpose is to help first-time buyers realize their dream of owning their own house. Buyers who buy a house for the first time and have an annual income of less than 40,000 Canadian dollars, or the total annual income of husband and wife is less than 80,000 Canadian dollars, are eligible for OHOSP subsidies.
3) Registered retirement savings plan (RRSP) can pay down payment. Couples in each family (including cohabiting couples) can withdraw 20,000 Canadian dollars from their respective RRSP accounts to pay the down payment of the house, and a family can withdraw 40,000 Canadian dollars, excluding taxes and interest, provided that the following conditions are met:
● Only applicable to first-time home purchase;
● Repayment must start from the second year of the withdrawal date;
● Buy old houses at a low price, resell them after renovation, deduct renovation costs and taxes, and earn the difference;
● The longest repayment period cannot exceed 15 years;
● The annual repayment amount shall not be less than115 of the total withdrawal amount;
● The part that cannot meet the minimum repayment amount is included in the income tax of the current year.