Canadians Expats Buying A Condo/Property In The US – Impact On Taxes?

By: Pete
Date posted: 01.30.2013 (5:04 pm) | Write a Comment  (0 Comments)

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One of things I’ve been considering is buying a condo in the depressed US housing market. It’s not that I think there will be this huge rebound in the next few months but rather because I think the value is good and as an expat living in Canada, having a second home in a warmer climate greatly appeals to me. It would be an understatement to say that I’m not a big fan of the Canadian winters.

What Are The Fiscal Impacts?

I gathered around and also asked my cross-border accountant for more information regarding the impacts of buying a condo in the US (both as a Canadian and US citizen). The first question seems to be:

Do I Intend To Rent Out The Condo?

I personally do not, at least in the near future. But if I did, to act legally, I would need to report the income and expenses on my tax returns (both Canadian and US). That would certainly add some level of complexity. I know that many rent out condos without declaring it on their tax filings but that seems like a bet I’m not willing to take.

Selling The Condo – Capital Gains?

Selling it would generate taxable capital gains which would certainly need to be considered. I’m not planning on selling it anytime soon and those taxes are changing so fast that it’s difficult to predict what they will be 20 or 30 years from now but if you’re buying with the intention to sell shortly after, this needs to be factored in

Canadian Tax Form T-1135

Canadians are in the obligation to report any foreign property that is purchased at a price of $100,000 or more. From what I understand it does not cause any other impact. Form T-1135 needs to be filed on an annual basis.

Anything Else?

There are obviously other factors to consider such as the value for your buck, local taxes, etc. But I was personally happy to see that there were no major hurdles for me to go ahead with the purchase. Have any of you bought property in the US? How did it go? Are you considering it?

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