Top 9 Tips for Canadian Snowbirds when Buying U.S. Real Estate
Buying a home away from home is a major commitment, buy hey! It’s an amazing option to save money in the long run. Besides, it’s a great investment for yourself and your family.
When thinking about buying a property in the U.S., we recommend taking things slowly, weighing your options and making sure you’re getting maximum value.
Here are some aspects you should take into consideration when analyzing a deal:
1. Consider your intended use and location of the property
What’s your plan for this new property? Will it become a cozy retreat for you and your spouse?
Or maybe a place for gathering with your friends?
How many people will be staying there on a regular basis? Answering these questions will help you determine the sizing and partitioning of the home, as well as the location and the desired amenities.
2. Evaluate your financial options / resources
Do you plan on buying the new property with private funds? If you need to sell a property in Canada in order to buy one in the U.S., you will most likely need to keep a close eye on exchange rates and find the most favorable time to do so.
Rokham Fard, the co-founder of online real estate brokerage, claims that May is the best month to sell a Canadian property and it could net up to $60k more than selling the same property at some other time over the year.
However, if you already have the necessary funds to buy a new property in the U.S., look for a cost-effective way to exchange your funds into US Dollars.
3. Find a currency exchange partner that you can trust
When choosing a currency exchange partner, there are several things to consider.
- Trustworthiness of this partner. Are they reliable? Do they have great reviews?
- A company that will be transparent, communicative and honest. You’ll want a thorough explanation of the process and to know upfront about all the fees this will entail.
- And of course, ask for their currency exchange rates. You might be surprised how rates vary between exchange companies and banks. Choosing the cheapest exchange company can save thousands of dollars.
At KnightsbridgeFX we made it our mission to offer the lowest rates possible when exchanging currency. We are able to do this because we buy in bulk (millions of dollars at once) and we can negotiate with financial institutions.
“I saved a huge amount, about $3,000 over what the bank quoted for U.S. dollars,” David Newman from Florida says. “Everything went smooth as a dream.”
Get a no-obligation currency exchange quote from us and keep the savings in your wallet.
Don’t take us for granted, ask for a quote today and see for yourself how much you stand to save.
4. Decide on the property type and get a professional appraisal
Take your time deciding which type of property you need.
You could go for a newly-built home, equipped with the latest amenities and technology, or you could go for a resale property. The first option, while definitely more appealing, could get very pricey. On the flip side, a resale property could be faulty and need some restoration.
Whatever your choice might be, make sure you get a professional appraisal of the property you are about to buy to fully understand what you’re spending your money on.
For more details on property appraisal companies, you can contact the American Society of Appraisers to find a local partner in the area of your interest.
5. Profit returning
It’s perfectly normal to consider renting the place while you’re not there, especially since you’ll probably only live there for 4 months a year.
Find a local real estate agency to help you with property management and to make sure the tenants keep the place in the best condition, while also ensuring they will pay their bills.
The International Facility Management Association has seen an increase in property management services in the US over the past years, as more and more professional agencies emerge and make their services available for companies and individual owners as well.
Browse the list of property management companies in the US and see which one is a good fit for you.
6. Legal matters to take into account
While the US is very permissive when it comes to Canadians buying property here, it’s still good to play safe and keep up with local laws and regulations.
First things first, make sure your passport is valid for 6 months after your expected return date. Even if this is not mandatory, we advise you to check this so you avoid unpleasant surprises at the border.
Keep in mind that you can stay in the U.S. for a maximum of 182 days (about 6 months) during a 12 month period.
This amount of days could be in a single visit or divided over several trips. If you stay less than 182 days in 12 months, you will not be considered a U.S. citizen and therefore not requested to pay state taxes.
Use this formula to calculate how many days your stay is counted as:
- Each day in the U.S. in the current calendar year counts as one day;
- Each day in the U.S. in the prior year counts as one-third of a day;
- Each day in the U.S. in the year before that counts as one-sixth of a day.
To be considered a non-U.S. resident, the IRS requires you to fill out form 8840.
As for health insurance, it depends on the area you live in Canada. British Columbia, Alberta, Saskatchewan, Manitoba, Northwest Territories, Ontario, New Brunswick and Nova Scotia require at least 5 months of residence in the province to continue health insurance coverage.
Quebec and Prince Edward Island require 6 months’ residency, but Quebec does not count trips of less than 21 days as non-residency.
Newfoundland and Labrador requires only 4 months. Nunavut and the Yukon have no residency requirements.
However, we recommend opting for travel insurance as well.
7. Additional purchasing fees
Besides the actual property price, you can expect to pay additional taxes and fees, regardless of property location.
These include professional fees such as for the real estate agent, attorney, inspector, appraiser or financial professionals. You can also expect closing costs to include sales tax and notary services.
8. Other costs and expenses
A new property comes along with a series of ongoing expenses.
These include mortgage expenses, utilities, community fees, insurance, security and even maintenance.
You may want to opt for professional help when it comes to maintenance, especially considering the fact that you’ll be away for several months a year.
9. Travelling back and forth
Choose a destination that is easy to reach from your hometown. You may want to be near an airport or in a place that has direct flights to your primary home.
Try to make some acquaintances in the area – this will not only help you cover your social needs, but might also come in handy when you return to Canada, so you have someone you trust that can watch over your place.