Everywhere you turn, people are talking about the economic slowdown and if it’s still a good time to buy that vacation home in the U.S. or someplace else. According to the National Association of Realtors, Canadians were the biggest foreign buyers of American real estate in 2010. That shouldn’t be surprising considering our proximity and the strong Canadian dollar.
Real estate companies in places like Florida or California are regularly holding special information seminars for the “snowbirds” interested in finding that escape for winter months. For those considering taking advantage of low housing prices in many parts of the world, do your research before you jump into the market.
Whether it’s in Florida, Hong Kong, or even a cottage by the lake in Canada, make sure you’re informed of all the factors that may affect you as a property owner.
Local Rules and regulations
Many countries have limits on how long you can stay or whether you need a visa. If you own a vacation property in the U.S.you may fall under the “Substantial Presence” rule, which could result in having to file taxes with the IRS. You may also have to pay capital gains when you sell the property. Speak with a local real estate professional to understand what you need to take into consideration.
Depending on where you are purchasing a vacation home, there may be tax implications that you need to be aware of. For example, you may be responsible for “non-resident property taxes” if you purchase in Florida or California.
If you’re thinking about renting out your vacation home, your rental income may be subject to local taxes and must be reported on your Canadian personal income tax return. It's important to maintain records of any related expenses that you may have with the vacation property. Talk to a local tax specialist to find out the tax implications of owning a vacation home in the area.
There are many financing options available for people looking to buy a vacation home, but if you’re buying outside of Canada, getting a mortgage isn’t one of them. Canadian lenders do not provide mortgages for properties outside the country. Many Canadians have found financing through a home equity loan, but this option is not for everyone. Some places like the U.S. will allow non-residents to get a mortgage. Start by talking to your mortgage broker or lender.
A vacation property can be a great investment and a perfect excuse to escape life’s daily routines. Staying informed will help you make better decisions on where that vacation home should be and if it fits your lifestyle.
CENTUM Mortgage Professionals may be able to help you get started in your search for that perfect vacation home. Contact an office near you to get started.