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Things to consider about owning U.S. property(Special) – Winter brings with it the dream of many Canadian snowbirds of owning a piece of property in the sunny south. With the recent rebound in the U.S. housing market and a decline in the value of the Canadian dollar, however, buying vacation property south of the border may not be quite as appealing as it was a couple of years ago.
“If you are just looking for a property deal you are probably too late as the housing market has already rebounded and the Canadian dollar has dropped against the U.S. greenback,” says Cleo Hamel, a senior tax specialist with American Expat Taxes. “Before you begin you should ask yourself some important questions, because how you answer them could well determine whether this is the right decision for you.”
One of the first issues to consider is how you’re going to finance your purchase. As a foreign investor, if you don’t have the full down payment for the property you may have to qualify for a mortgage, which can be difficult.
The mortgage lender is likely going to look at your credit history and sometimes will ask for up to six months of mortgage payments up front. “You may need to make a larger down payment than expected because you have no credit history in the U.S.,” Hamel says.
Canadians cannot get a Canadian mortgage for a property in another country. However, if you already own property in Canada with enough equity, you could refinance it here and use the money to buy in Florida.
In the end, the best and maybe cheapest way to finance your purchase might be to borrow the money in Canada and buy the property in Florida outright.
Whether you are interested in purchasing property in the U.S. as a vacation home or strictly as an investment, there are many things to consider - property management if you are to be an
absentee landlord, residency rules, differences in mortgage financing and how interest is charged, income tax implications, estate tax implications, and the list goes on.
This is not as simple as buying a property and making decorating decisions.
