If you are a foreign investor interested in buying property abroad, investment property in Canada may offer certain value that cannot be matched by the opportunities available in your home market. There are several advantages of buying investment property in Canada that any person investing in property abroad should consider when making decisions about location of his or her real estate investment.

With property prices currently declining, albeit at a modest pace, real estate market conditions in Canada do not provide opportunities for short selling and making quick profit on short sales. Therefore, Canada’s real estate market, which, according to some reports, has seen prices fall up to 8 per cent in annual terms, may represent a good opportunity for foreign real estate investors interested in buying rental property abroad. This investment strategy would secure income flows that justify buying rental investment property in Canada at time when prices of residential properties are falling and rents are increasing. Once the prices start to pick up, which may be as soon as next year, gains on rental investment property in Canada in the form of capital appreciation will start to accumulate. However, expectations of capital gains on investment property in Canada should be realistic, taking into perspective expectations of returns on comparable property abroad. Based on the available historical data, capital returns from investment property in Canada have averaged 7.1 per cent in compounded annual rates. This average rate of return is much higher than that realized by investment property abroad. Investment property in Canada offers a major potential to those property investors, especially international property investors, who want to buy rental investment property and realize both income and capital gains from their investment.

Another benefit to foreign investors buying investment property in Canada is the favorable tax treatment of income from Canadian rental investment property and realized capital gains. Only half of the total realized capital gain from disposition of investment property in Canada is taxed as income. Capital gains are computed by deducting the costs incurred in selling and purchasing the property, capital expenditures, and such costs as additions and improvements to the property. This may be a more favorable tax treatment than that applied on properties abroad.

On the other hand, foreign investors as non-residents earning rental income from investment property in Canada are generally subject to a 25 per cent tax on gross income. If they chose to file an individual taxpayer return under section 216, their income may be taxed at the standard federal income tax rate. These rates range between 15 per cent and 29 per cent, depending on income. An additional 48 per cent surcharge on the final tax liability is applicable. Various deductible expenses and depreciation allowances may substantially lower the total tax liability. At same time, foreign investors holding investment property in Canada are exempted from paying provincial taxes. Once all these tax elements are factored into the total return on property investment, owning investment property in Canada may prove more favorable than investments in comparable property abroad, including those in the investors’ home markets.

Overall, investors from overseas who consider buying investment property in Canada could take advantage of the weaker pricing of residential properties to lock in investment properties that have a substantial potential for return on capital. This return could be higher than that offered on similar investments in property abroad. Investors could lease their investment property and earn rental income that may be taxed at rates that are more favorable than those in the foreign investors’ home markets. Once the real estate market in Canada returns to strong growth and prices recover, investment properties’ value will appreciate, yielding additional returns on investment. All this could provide a total return on investment property in Canada that is comparably much higher than the return on investment on properties abroad.

Recent studies suggest that the amount of people jumping on the investment property bandwagon is set to rise over the next six years, due to the 2012 Olympics. As with the many other benefits brought about by London’s hosting of 2012 Olympics, this predicted increase in investment property will not just affect London but all major towns and cities in the UK.

Whether you are a first time buyer set to buy your own home or an influential investor looking into investment property the benefits which the investment in bricks and mortar afford, should not be underestimated. Although taking risks on the stock exchange may yield higher returns, investment property can provide you with a stable, steady income and a relatively secured level of return on investment. When looked at with a long-term view the investment property is unlikely to ever lose you money. You may have to pick the right time to sell a property but as long as you keep looking at this investment with a long-term view you will be hard pushed to go wrong. Put simply, property is historically stable and if you are prepared to wait it out you can make money on it.

If you do your homework and consider your investment property as a long term investment the financial gains to be won through investment into property are fairly substantial. In short, one of the most significant benefits with regards to investment property is that as long as you have a bit of free capital you are able to borrow money from the mortgage lenders, in order to buy a property which you can then let out and charge tenants money in order to pay back the mortgage lender. In affect you become a middleman who is set to earn a good return on investment as long as you decide to follow a few basic steps.

Studies suggest that, on average, a home doubles in value every seven years and whilst this is not guaranteed as long as you have the property correctly evaluated and you buy in the right area you can feel certain that you are making a good, financially sound investment. This means that if you have a lump sum of money which you are interested in investing then Investment Property is certainly a type of investment worth having a look at.