I am looking at purchasing a condo in the US and want to know how the rules of ownership for foreign investors would affect me now or when I sell. It was mentioned at a REIN meeting that if you own property there, then a person is classified as a US citizen and how is that going to affect my Cdn taxes/income?
Investing in the USA
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QUOTE (rogercote @ Mar 22 2010, 07:39 PM)
I am looking at purchasing a condo in the US and want to know how the rules of ownership for foreign investors would affect me now or when I sell. It was mentioned at a REIN meeting that if you own property there, then a person is classified as a US citizen and how is that going to affect my Cdn taxes/income?
you have to pay taxes in the US and in Canada .. and you will have to file taxes each year in both countries, too.
Some states, like Florida, charge you higher property taxes as a non-resident.
related posts, via google, here: Snowbird taxation issues
I am looking at purchasing a condo in the US and want to know how the rules of ownership for foreign investors would affect me now or when I sell. It was mentioned at a REIN meeting that if you own property there, then a person is classified as a US citizen and how is that going to affect my Cdn taxes/income?
you have to pay taxes in the US and in Canada .. and you will have to file taxes each year in both countries, too.
Some states, like Florida, charge you higher property taxes as a non-resident.
related posts, via google, here: Snowbird taxation issues
QUOTE (rogercote @ Mar 22 2010, 09:39 PM) I am looking at purchasing a condo in the US and want to know how the rules of ownership for foreign investors would affect me now or when I sell. It was mentioned at a REIN meeting that if you own property there, then a person is classified as a US citizen and how is that going to affect my Cdn taxes/income?
They do things a little differently down in the States. If you are going to invest in income properties in the States you will have to file both Federal and State tax returns in addition to your Canadian return. The rates and rules are different in each State. You may want to take this into account when analyzing prospective properties. I believe they would be treating you as a resident perhaps but not as a citizen. They are quite picky about such things. Others are investing down there so there must be tips they can share. There was a recent reference to a book on these forums about investing in the US that you should be able to search for. Best of luck.
They do things a little differently down in the States. If you are going to invest in income properties in the States you will have to file both Federal and State tax returns in addition to your Canadian return. The rates and rules are different in each State. You may want to take this into account when analyzing prospective properties. I believe they would be treating you as a resident perhaps but not as a citizen. They are quite picky about such things. Others are investing down there so there must be tips they can share. There was a recent reference to a book on these forums about investing in the US that you should be able to search for. Best of luck.
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QUOTE (RCrein @ Mar 23 2010, 11:41 AM) They do things a little differently down in the States.
including the mortgages: do not only spend time researching the properties under consideration, but also the mortgage options. This is the one big lesson we learned and I wished we had spend far more time looking at the various mortgage options and brokers !!
ARM, points, fees, 30 year am, reset, teaser rates, escrow agent ... learn the lingo .. and learn the various terms/fees/differences to Canada !
including the mortgages: do not only spend time researching the properties under consideration, but also the mortgage options. This is the one big lesson we learned and I wished we had spend far more time looking at the various mortgage options and brokers !!
ARM, points, fees, 30 year am, reset, teaser rates, escrow agent ... learn the lingo .. and learn the various terms/fees/differences to Canada !
I am suprised at the answers posted by so called experienced/mature members.
I ended up purchasing a foreclosure last year in FLORIDA. It was a b*>Xch but I think its well worth it. Its rented right now with little +ve cash flow at the moment. ALWAYS DO THE MATH my friends.
There is no double taxes i.e. you don`t pay taxes in US and CANADA. If you end up taxes in US, you`ll be allowed to claim a foriegn tax credit that one can use for Canadian taxes.
Secondly, property taxes are not high for Non-residents. I`ve heard this from Canadian RE agents discouraging buyers to buy out of country to serve their own gains or ppl who pretend to know.
I ended up purchasing a foreclosure last year in FLORIDA. It was a b*>Xch but I think its well worth it. Its rented right now with little +ve cash flow at the moment. ALWAYS DO THE MATH my friends.
There is no double taxes i.e. you don`t pay taxes in US and CANADA. If you end up taxes in US, you`ll be allowed to claim a foriegn tax credit that one can use for Canadian taxes.
Secondly, property taxes are not high for Non-residents. I`ve heard this from Canadian RE agents discouraging buyers to buy out of country to serve their own gains or ppl who pretend to know.
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QUOTE (MachoMan @ Apr 26 2010, 05:00 PM) I am suprised at the answers posted by so called experienced/mature members.
I ended up purchasing a foreclosure last year in FLORIDA. It was a b*>Xch but I think its well worth it. Its rented right now with little +ve cash flow at the moment. ALWAYS DO THE MATH my friends.
There is no double taxes i.e. you don`t pay taxes in US and CANADA. If you end up taxes in US, you`ll be allowed to claim a foriegn tax credit that one can use for Canadian taxes.
Secondly, property taxes are not high for Non-residents. I`ve heard this from Canadian RE agents discouraging buyers to buy out of country to serve their own gains or ppl who pretend to know.
Individuals will always make silly comments on topics that they have little knowledge. That has always been the problem with the InterWebz. U.S. real estate is just one example. Another is investing in the stock market. Just accept it.
As you mentioned, the Canadian investor pays the IRS first, and claims a foreign tax credit for use on their Canadian taxes. All you need to do is fill out a W7 to get an ITIN and find an accountant who is familiar with the U.S.-Canadian tax treaty.
In addition, property taxes are not high for non-residents. From my limited experience, they are lower in the U.S. compared to what I am used to in Canada.
Real estate in the U.S. is free money as far as I can tell (I haven`t been able to find similar double digit cap rates/cash-on-cash with realistic expenses). My wife and I own properties in Phoenix and will continue to buy for a few years yet.
In addition, for better or worse, there is no rent control in Phoenix and evictions favour the landlord - not the tenant. I can have a tenant out with a court order + sheriff in 4-6 weeks.
I ended up purchasing a foreclosure last year in FLORIDA. It was a b*>Xch but I think its well worth it. Its rented right now with little +ve cash flow at the moment. ALWAYS DO THE MATH my friends.
There is no double taxes i.e. you don`t pay taxes in US and CANADA. If you end up taxes in US, you`ll be allowed to claim a foriegn tax credit that one can use for Canadian taxes.
Secondly, property taxes are not high for Non-residents. I`ve heard this from Canadian RE agents discouraging buyers to buy out of country to serve their own gains or ppl who pretend to know.
Individuals will always make silly comments on topics that they have little knowledge. That has always been the problem with the InterWebz. U.S. real estate is just one example. Another is investing in the stock market. Just accept it.
As you mentioned, the Canadian investor pays the IRS first, and claims a foreign tax credit for use on their Canadian taxes. All you need to do is fill out a W7 to get an ITIN and find an accountant who is familiar with the U.S.-Canadian tax treaty.
In addition, property taxes are not high for non-residents. From my limited experience, they are lower in the U.S. compared to what I am used to in Canada.
Real estate in the U.S. is free money as far as I can tell (I haven`t been able to find similar double digit cap rates/cash-on-cash with realistic expenses). My wife and I own properties in Phoenix and will continue to buy for a few years yet.
In addition, for better or worse, there is no rent control in Phoenix and evictions favour the landlord - not the tenant. I can have a tenant out with a court order + sheriff in 4-6 weeks.
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QUOTE (RickE @ Apr 26 2010, 05:53 PM)
I have been researching the USA market for about a year and am ready to jump in.
hardly .. the USA is WAY too big ..
Ask yourself:
i) what sub-market ?
ii) what type of houses/condos?
iii) pre-sale ? or used ?
iv) pretty or ugly ?
v) A area ? or C- area ?
vi) do you own property in Canada ?
v) if yes: what is different ? what is teh same ?
vi) live there part-time ? or buy and rent ?
do you have:
vii) realtor
viii) property manager ?
ix) insurance agent ?
x) mortgage broker ?
xi) cash to close and fly there / live there until closed ?
xii) exit strategy ?
xiii) an understanding of initial and ongoing costs ?
xiv) understanding of tax issues / cost of filing both in Canada and US
xv) an understanding / opinion on exchange rate on exit ?
I have been researching the USA market for about a year and am ready to jump in.
hardly .. the USA is WAY too big ..
Ask yourself:
i) what sub-market ?
ii) what type of houses/condos?
iii) pre-sale ? or used ?
iv) pretty or ugly ?
v) A area ? or C- area ?
vi) do you own property in Canada ?
v) if yes: what is different ? what is teh same ?
vi) live there part-time ? or buy and rent ?
do you have:
vii) realtor
viii) property manager ?
ix) insurance agent ?
x) mortgage broker ?
xi) cash to close and fly there / live there until closed ?
xii) exit strategy ?
xiii) an understanding of initial and ongoing costs ?
xiv) understanding of tax issues / cost of filing both in Canada and US
xv) an understanding / opinion on exchange rate on exit ?
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Thomas XV is a big issue and often ignored
The best purchase in the world doesn`t get you very far over time if the currency market doesn`t work your way
Unless you`ve figured out an easy and costless way to hedge currency valuations investing out of your home country has a large element of speculation to it.
The best purchase in the world doesn`t get you very far over time if the currency market doesn`t work your way
Unless you`ve figured out an easy and costless way to hedge currency valuations investing out of your home country has a large element of speculation to it.
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QUOTE (Rickson9 @ Apr 26 2010, 05:10 PM)
In addition, property taxes are not high for non-residents. From my limited experience, they are lower in the U.S. compared to what I am used to in Canada.
Property taxes in the US can vary greatly by state. Ultimately you're not purchasing the nebulous "US Real Estate market" you're purchasing a specific property in a specific city in a specific state. So the current (and expected trend!) of those specific property taxes is what matters.
And there definitely are places where the property taxes are higher for those not living in the property as their primary residence. The difference in Maui, for example, is significant. Again, it varies by location.
Michael
In addition, property taxes are not high for non-residents. From my limited experience, they are lower in the U.S. compared to what I am used to in Canada.
Property taxes in the US can vary greatly by state. Ultimately you're not purchasing the nebulous "US Real Estate market" you're purchasing a specific property in a specific city in a specific state. So the current (and expected trend!) of those specific property taxes is what matters.
And there definitely are places where the property taxes are higher for those not living in the property as their primary residence. The difference in Maui, for example, is significant. Again, it varies by location.
Michael
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QUOTE (bizaro86 @ Apr 28 2010, 11:54 AM)
Property taxes in the US can vary greatly by state. Ultimately you're not purchasing the nebulous "US Real Estate market" you're purchasing a specific property in a specific city in a specific state. So the current (and expected trend!) of those specific property taxes is what matters.
And there definitely are places where the property taxes are higher for those not living in the property as their primary residence. The difference in Maui, for example, is significant. Again, it varies by location.
Michael
You are correct.
For anybody who is interested, as I mentioned in my post, my wife and I are purchasing property in Phoenix, AZ. Property taxes there are lower than what I am used to paying in the GTA. We are paying property taxes of $1.15 per sq ft per year in Phoenix, AZ (obviously this varies by zip/fsa).
Property taxes in the US can vary greatly by state. Ultimately you're not purchasing the nebulous "US Real Estate market" you're purchasing a specific property in a specific city in a specific state. So the current (and expected trend!) of those specific property taxes is what matters.
And there definitely are places where the property taxes are higher for those not living in the property as their primary residence. The difference in Maui, for example, is significant. Again, it varies by location.
Michael
You are correct.
For anybody who is interested, as I mentioned in my post, my wife and I are purchasing property in Phoenix, AZ. Property taxes there are lower than what I am used to paying in the GTA. We are paying property taxes of $1.15 per sq ft per year in Phoenix, AZ (obviously this varies by zip/fsa).
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QUOTE (Rickson9 @ Apr 28 2010, 12:45 PM)
You are correct.
Thanks!
QUOTE (Rickson9 @ Apr 28 2010, 12:45 PM)
For anybody who is interested, as I mentioned in my post, my wife and I are purchasing property in Phoenix, AZ. Property taxes there are lower than what I am used to paying in the GTA. We are paying property taxes of $1.15 per sq ft per year in Phoenix, AZ (obviously this varies by zip/fsa).
That is very interesting, and is exactly the type of data I was talking about. That's about what I'm paying on condos I'm renting out in Calgary right now, my personal residence taxes are lower.
Michael
You are correct.
Thanks!
QUOTE (Rickson9 @ Apr 28 2010, 12:45 PM)
For anybody who is interested, as I mentioned in my post, my wife and I are purchasing property in Phoenix, AZ. Property taxes there are lower than what I am used to paying in the GTA. We are paying property taxes of $1.15 per sq ft per year in Phoenix, AZ (obviously this varies by zip/fsa).
That is very interesting, and is exactly the type of data I was talking about. That's about what I'm paying on condos I'm renting out in Calgary right now, my personal residence taxes are lower.
Michael
When I see a 4 bedroom home 10 minutes from Disney World selling for $100K or a very nice 3 bedroom condo ($135K with $10K Per annum net income) in a gated resort just a hop away from the worlds largest tourist attraction, and I cannot buy the same properties in my town selling for less than $350K, then it is very tempting to learn all the nuances of investing in the US Market.
While I appreciate this is an investment forum and risk has to be weighed, I find it interesting how many posters are advising against it, at least on the surface, when it seems like it might be the only time to be able to afford a pretty nice investment home in a warm climate.
I think it would be well worth the risk at $100K. I think I'll learn some more.
While I appreciate this is an investment forum and risk has to be weighed, I find it interesting how many posters are advising against it, at least on the surface, when it seems like it might be the only time to be able to afford a pretty nice investment home in a warm climate.
I think it would be well worth the risk at $100K. I think I'll learn some more.