Today’s economic climate has created a unique real estate investment opportunity for Canadians looking to invest in U.S. real estate.
This is a combination of two different things. The first thing to consider is that the Canadian dollar is strong because of the booming economy. The opposite holds true for the American economy. This has put the American dollar in a weak position. The bottom line for this situation is that Canadians have much more buying power in the U.S. real estate market with these current buying conditions.
However before jumping the gun and purchasing U.S. real estate there are some things you need to know. Many people may not realize it but there are different laws and procedures for U.S. real estate purchases than Canada. In the U.S., foreign investors are required to pay additional property taxes. These are taxes imposed on all non residents and can be a substantial amount. Bear in mind however that you can use the interest paid on your U.S. real estate home as a tax deduction. If you will be renting or leasing your property, be prepared for the 30% tax imposed on this income.
You must also consider the amount of time you will be spending in the US when looking for U.S. real estate.
If you stay between 31 and 183 days out of the year you will be required to take the substantial presence test. This test evaluates the amount of time you have spent in the country over the last three years. It works by taking the amount of days you were in the country and adding the 1/3 of the previous year and 1/6 of the year before. If the total is 183 or greater you will be subject to filing Federal taxes in the US. One way to avoid this is by getting a dual citizenship. It is important to seek legal council before perusing this course of action.
Before investing in s specific area, make certain of the taxes that you will have to face. Some areas have lower nonresident taxes than others. A good way to handle this is to hire a professional accountant who is familiar with US taxes. They will be able to guide you to finding the best solution when making your investment.
The actual process of buying U.S. real estate is different as well.
It is highly recommended that before making any purchase, hire a real estate agent. There are many agencies that specialize in helping Canadians and other foreign investors acquire real estate. They are familiar with the process and can guide you through every step of the way. They will also be able to help you find the best deals on homes that may be in foreclosure or pre-foreclosure as they enter the market.
Now that you are aware of some of the pitfalls to avoid when purchasing U.S. real estate, you will be able to avoid these things as you prepare for your investment. While the US can be tough on foreign investors, the benefits far outweigh the trouble.