Tips for U.S. Real Estate Ownership
A recent post highlighted an article in the Globe and Mail focused on financing warm weather vacation properties. This post is a companio to that article written by Roma Luciw. Check out the LifePast50 "where to live" post category for more. And, LifePast50 would sure appreciate responses from Canadians with actual southern buying experience – let us all share the benefits of your experience.
Renting out a U.S. property
If you collect rental income from a U.S. property, you need to file a U.S. tax return. If you purchase a property with the intention of renting it out for all or part of the year, make sure it is in a good location with desirable amenities nearby: beaches, golf, ocean, restaurants, hospitals.
Buying a U.S. property
Know how to title your property and the implications of each type of ownership: fee simple, joint with its survivorship, joint as tenants in common, etc. Simply buying a place in the U.S. does not mean you need to file for U.S. taxes, only if you rent or sell.
Financing a U.S. property
If possible, secure financing with a U.S. financial institution. They will have better knowledge of U.S. mortgages and provide more options in terms of how long you can lock in for. (Royal Bank of Canada has U.S. operations in the snowbird hot spots of Florida and the Carolinas.)
Tax rules on a U.S. property
Recent changes to the Canada-U.S. Tax treaty prevent foreign owners from paying taxes twice. The tax treaty, one of the most important documents for the protection of Canadian financial assets in the U.S., overrides domestic Canadian and U.S. rules and can lower your overall tax bill.
Options for retirees
For Canadian who have retired, the U.S. has portfolio opportunities to earn as much interest income tax-free as possible. Also, the costs of living in many U.S. retirement areas are substantially lower than equivalent Canadian areas.
Exchanging currency
Exchange large sums at one time and ask for the spot rate rather than accepting the posted rate. Avoid using cash for the exchange. Shop around to at least three different institutions and when possible, use reputable currency brokers rather than banks.
Immigration, custom rules
Know how long you can legally stay in the U.S. as a visitor. If you wish to work in the U.S. or to stay more than six months, get a proper visa. If you stay longer than six months, you will be required to file a U.S. tax return.
snowbird Medical coverage
Whether you are going to the U.S. for a two-week holiday or a six-month stint, make sure to get good travel insurance. When possible, take high-deductible plans. Prices rise substantially if you stay more than three months. Also, try to fill any prescriptions before you leave Canada.
Roma Luciw
October 24th, 2009 at 3:06 pm
[...] http://lifepast50.ca/2009/10/tips-for-u-s-real-estate-ownership/Lifepast 50.ca continues to gather informative articles to guide Canadians in their warm weather vacation property buying decisions. This post summarizes the key issues surrounding ownership of souther property. [...]
October 24th, 2009 at 3:48 pm
[...] http://lifepast50.ca/2009/10/tips-for-u-s-real-estate-ownership/Lifepast 50.ca continues to gather informative articles to guide Canadians in their warm weather vacation property buying decisions. This post summarizes the key issues surrounding ownership of souther property. [...]
October 24th, 2009 at 3:54 pm
[...] http://lifepast50.ca/2009/10/tips-for-u-s-real-estate-ownership/Lifepast 50.ca continues to gather informative articles to guide Canadians in their warm weather vacation property buying decisions. This post summarizes the key issues surrounding ownership of souther property. [...]