Why Canadians want to buy a property in the U.S.?
Based on the recent survey conducted by the Bank of Montreal – one in five Canadians are interested in buying property in the United States.
National Association of Realtors also provided statistics that 23 percent of international buyers were from Canada last year – making them the largest group of foreign buyers for the past three years.
Why Canadians are being drawn to U.S. property?
- Canadian “snowbirds” escaping their cold winters and looking for U.S properties in southern states like Arizona, Florida or California.
- Strong Canadian dollar versus housing prices fallen by 30 percent in the last four years made buying properties by Canadians even more attractive.
What are the benefits of buying the U.S. properties by Canadians?
Do your dues diligence first before you jump into the idea of buying the U.S. properties. Also, every Canadian buyer should get professional help from people who understand the U.S. tax laws. There is a range of, legal and lifestyle issues to consider.
If you’re a Canadian who doesn’t spend more than 121 days in the U.S. in any tax year, you are not considered a U.S. resident for income tax purposes. However, if you are planning to stay longer you risk having to pay income tax in both countries. Thinking about renting the property out for part or all of the year? There will be 30 percent income tax that you must pay to IRS on your rental income.
If you sell your U.S. property, there’s a withholding tax of 10 percent of the gross sale price.
But, you don’t have to pay the tax if the buyer is buying the property as a primary home and the sale price is less that $300,000. Also, you can obtain withholding certificate if the tax liability will be less than 10 percent of the sale price.
Consider the property taxes before buying the U.S. property – they are very in different states. Some states will charge you more since you are out-of-state resident.
To do list before buying the U.S. property
- Don’t buy a property without visiting it in person.
- Check: the neighborhood (drive by during the day and night) a resale value local crime rates tenant turnover vacancy rate cost of insuring the property
- Find a real estate professional that will assist you during every stage of the transaction.
source: International Business Times