Because of the strong Canadian dollar and the very low U.S. real estate prices, more and more Canadians are rushing down to the United States and buying property.
Many Canadians think that their favorite destinations in the U.S. like Miami and Las Vegas are great places to buy vacation homes. As long as they find property for sale at a very low rate, they immediately purchase it without much thought. Some buyers have not even personally seen the property that they are purchasing. What most of these buyers do not realize is that there are several implications of their U.S. real estate purchase like taxation and financing.
For those thinking about purchasing U.S. real estate, here are some things that should be considered:
o Will this be purely an investment or will the property just be a vacation home in the United States? There are many things to consider when the purchase is for investment purposes only. Taxation is the main issue and professional help is necessary in order to pay the least amount possible. In some cases, the buyer might end up being required to pay in both countries. This is why tax planning advice from a professional is important. There are also certain loopholes that can be taken advantage of so that the tax will be significantly lower.
o The location of the property. Most Canadians prefer the states of Florida, Nevada and Arizona. If it will only be a vacation home, can it be easily accessed from the home in Canada? Is it located in a good neighborhood? It is important to do thorough research before finally deciding to purchase U.S. real estate. The buyer should spend a considerable amount of time in the particular area of the property and learn about relevant information like insurance rates, crime rates, resale values, etc.
o How will the property be held? The property can be leased during the times of the year when it is vacant. The owner can either make use of a property manager or personally look for people who will lease the house. Again, it is important to consider the tax laws of the United States when it comes to rental income. With the internet, finding renters is a lot easier compared to the old days.
o What financing will be used for the purchase? Most Canadians opt financing in Canada to pay cash for their U.S. real estate but there are many financing programs in the United States for Canadians. The rates are considerable different so checking around in the U.S. and Canada can save a lot of money.
At the end of the day, it is important to look at the U.S. real estate purchase as an investment even when it will be used as a vacation property in the U.S.
It is also important not to be hasty and do sufficient research about the area, taxation, financing and all relevant subjects. After all, even the richest people in the world would never even consider throwing away money. No one would want to end up with U.S. real estate that cannot be lived in, rented or sold.