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A Florida home is damaged in 2005 after it was struck by Hurricane Dennis. This type of occurance demonstrates the need for proper insurance. (AP Photo/John Bazemore)
A Florida home is damaged in 2005 after it was struck by Hurricane Dennis. This type of occurance demonstrates the need for proper insurance. (AP Photo/John Bazemore)

Personal Finance

Tips for aspiring snowbirds Add to ...

Some things to look out for when buying a property in the U.S.:

Renting out a U.S. property If you collect rental income from a U.S. property, you need to file a U.S. tax return. If you purchase a property with the intention of renting it out for all or part of the year, make sure it is in a good location with desirable amenities nearby: beaches, golf, ocean, restaurants, hospitals.

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Buying a U.S. property Know how to title your property and the implications of each type of ownership: fee simple, joint with its survivorship, joint as tenants in common, etc. Simply buying a place in the U.S. does not mean you need to file for U.S taxes, only if you rent or sell.

Financing a U.S. property If possible, secure financing with a U.S. financial institution. They will have better knowledge of U.S. mortgages and provide more options in terms of how long you can lock in for. (Royal Bank of Canada has U.S. operations in the snowbird hotspots of Florida and the Carolinas.)

Tax rules on a U.S. property Recent changes to the Canada-U.S. Tax treaty prevent foreign owners from paying taxes twice. The tax treaty, one of the most important documents for the protection of Canadian financial assets in the U.S., overrides domestic Canadian and U.S. rules and can lower your overall tax bill.

Options for retirees For Canadian who have retired, the U.S. has portfolio opportunities to earn as much interest income tax-free as possible. Also, the costs of living in many U.S. retirement areas are substantially lower than equivalent Canadian areas.

Exchanging currency Exchange large sums at one time and ask for the spot rate rather than accepting the posted rate. Avoid using cash for the exchange. Shop around to at least three different institutions and when possible, use reputable currency brokers rather than banks.

Immigration, custom rules Know how long you can legally stay in the U.S. as a visitor. If you wish to work in the U.S. or to stay more than six months get a proper visa. If you stay longer than six months, you will be required to file a U.S. tax return.

Medical coverage Whether you are going to the U.S. for a two-week holiday or a six-month stint, make sure to get good travel insurance. When possible, take high-deductible plans. Prices rise substantially if you stay more than three months. Also, try to fill any prescriptions before you leave Canada.

Get your property covered Look into what kind of insurance you will require. For instance, people buying in Florida will need to get hurricane and termite coverage, something they would never need to worry about in Canada.

Beware of condo fees Canadians looking to buy condos should make sure that their complex is nearly full. If it is only partially full, you could get saddled with paying for all of the fees for things like the common areas, which can get expensive.

Seek good advice Look for advisers that have both U.S. and Canadian professional qualifications and experience. Do background checks on the regulatory bodies in Canada and the U.S., as well as Internet searches.

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