Buying property in the US, specifically Florida, can be one of the greatest home purchases you can make. Why? Because it means you may no longer have to deal with the long, cold Canadian winters! Of course there are many more great reasons to own property in the US! When we Canadians make home purchases in the US we are often blinded by the warm climate and green grass and forget about the tax consequences related to these purchases? Is there a tax consequence upon making a purchase? Do you have to report this on your Canadian tax return? What are the implications if this is done incorrectly? What if circumstances are such that you decide to sell your property? Maybe the exchange rate differential is too great to pass up so you decide to sell. Or maybe you have realized that your current winter vacation home is either to big or small (considering all of your family comes to visit you yet never seems to visit in the summer when you are home!). Regardless of your decision to sell there are several factors to consider when making your decision.
Clearly the condition of the real estate market and current exchange rates are the 2 biggest factors everyone considers, however there is another consideration that is often over looked until the transaction has been complete. Yes, you guessed it, its one of the two constant factors in life … TAXES! When you sell your US property there are tax considerations that need to be considered and planned for. Failure to do so could result in the IRS holding a significant amount of your sale proceeds for an extended period of time. And before you say ‘I am Canadian they cannot do that’, yes they can and do! Having a significant amount of the proceeds held back could materially impact the decision you made to sell. What if you need those funds for another purchase or investment you want to make? Do you have a plan B in place in case those funds are not available immediately? And don’t forget about Canada – they are going to want a piece of the action to. These tax consequences can seem overwhelming and daunting unless you are provided with proper advice.
Our cross border tax accountants for Canada to Florida are well equipped to handle these questions and many more! They are Canadian Chartered Professional Accountants and US Certified Public Accountants with offices in both Canada and Florida. They deal exclusively with cross border issues such as this. Please feel free to contact our team at anytime!
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