Here are 6 tips for buying U.S. real estate.
When you feel the first chill of a Canadian winter, are you thinking about packing your bags and heading south?
You’re not the only one: More than 500,000 Canadians currently own property in Florida alone, where the median home price is US$169,400, as per a BMO outlook report. Even with the exchange rate, you may be able to find a relatively good deal if you know where to look.
If you’re thinking about purchasing U.S. real estate — now or once you retire — here are six important steps to consider:
- Scout a location: There are many great warm-weather locations to choose from in the United States, from beach towns to mountainous regions. As you think about where you’d like to establish your home away from home, consider your interests and hobbies, do plenty of research, and schedule time to visit the area. As you do so, ask yourself the following questions:
- Will I be able to participate in my favourite activities, such as hiking in the mountains or swimming in the ocean?
- Do I need a place big enough to host family and friends?
- Would it be easier to live near transportation or an airport?
- Will I want to rent this property, if possible?
- How will the property be maintained when I’m away?
Considering Florida? You’ll find Canadians in Sarasota County, Orlando, Miami, Fort Lauderdale and Palm Beach, to name a few hotspots. Want to step outside the Sunshine State? Popular options include Las Vegas, Nevada, and Phoenix, Arizona.
Tip: Look into neighbourhoods that are undergoing development — you may be able to get a good deal before the area explodes.
Ideally, you’ll work with a local real estate agent who can raise any questions or concerns you may not have considered. If possible, choose an agent who comes highly recommended and has experience working with foreign buyers. Check out these additional 5 tips for selecting a real estate professional.
Tip: The National Association of Realtors (NAR) has a field guide that illustrates what it takes to work with a real estate agent who specializes in international purchases.
In addition, you’ll need to connect with a home inspector, an accountant, a lawyer and a personal banker who understand Canadian and American lending options. Learn more about how to assemble your dream team.
Once you’ve decided all plans are a go, it’s time to secure financing. Consider working with a bank that has a partner U.S. branch, as they’ll often be able to consider your credit standing in Canada, and help you figure out whether you should finance your home in Canada or south of the border.
If you’re a BMO® customer, you can speak to someone about your U.S. banking needs by calling the BMO Cross-Border Hotline at 1-888-214-6720. Or, consider making an appointment online to help better understand the process of buying a home across the border.
- This year: Each day counts as one day
- Last year: Each day counts as one-third of a day
- The year before: Each day counts as one-sixth of a day
Remember, if you spend more than 183 days in the United States (according to the above formula), you may be considered a resident1. Be sure to refer to the Substantial Presence Test for full details, including examples and exemptions1.
Second, as your insurance is most likely not valid outside of Canada, be sure to purchase travel insurance that covers your stay in the United States. According to the Government of Canada, this should include health, life and disability coverage that may help you avoid large expenses, such as the cost of hospitalization or medical treatment.
If you’ll be away from your home in Canada for an extended period of time, refer to your home insurance policy, too — many policies will require you to have someone walk through the property every so often. You’ll also need coverage for your U.S. property, as well as a plan for covering things like home maintenance, both indoors and out.
While it’s a bit of work up-front, you can look forward to enjoying plenty of sunshine if you choose to head down south.
1For information purposes only. Speak to a professional for advice about cross-border visits and tax implications.