Buying Canadian property as an American

02 November 18
Cross Border Tax

There are many reasons to invest in Canadian property as an American. The process, however, is not always straightforward. Here are a few tips to streamline the process and help you make the best decision for your investment.

1. Get your finances in order

Before you start shopping for a property, it’s important to get your finances in order. This includes getting pre-approved for a mortgage and understanding the different financing options available to you.

2. Choose the right location

One of the most important factors to consider when investing in Canadian property is location. Not all markets are created equal, so be sure to do your research before making any decisions. Make a list of all the Canadian cities

that interest you and compare them based on things like job growth, cost of living, and quality of life.

3. Work with a reputable real estate agent

Investing in Canadian property as an American can be complicated, so it’s important to work with a reputable real estate agent. Look for someone who has experience working with American buyers and can help you navigate the process from start to finish.

4. Be prepared to negotiate

In Canada, the real estate market is much more negotiable than in the United States. When making an offer on a property, be prepared to negotiate until you reach a fair price for both parties.

5. Get familiar with the tax laws

Investing in Canadian property also comes with some tax implications. Be sure to get familiar with the tax laws in Canada so you can understand what you’ll be responsible for come tax time.

6. Work with a qualified professional

Investing in real estate is a big decision, so it’s important to work with a qualified professional who can help you navigate the process. This could be a real estate agent, lawyer or accountant.

7. Understand the tax implications

Investing in Canadian property also has tax implications. Be sure to consult with a tax professional to understand how this could impact your overall financial picture.

If you’re a U.S. citizen or resident alien and you own Canadian real estate, you may need to file a Canadian income tax return. The income you receive from Canadian real estate is subject to Canadian tax law, even if you don’t live in Canada.

If you don’t file a timely Canadian income tax return, you may be subject to interest and penalties. In addition, the Canada Revenue Agency may withhold your future refunds.

8. Know your exit strategy

Before you purchase a property, it’s important to have a clear exit strategy in mind. This will help you make the best decision for your investment and ensure that you’re not stuck with a property that you can’t sell.

Conclusion

Investing in Canadian property can be a great way to diversify your portfolio and secure your financial future. However, it’s important to understand the process and be prepared for the challenges that come with it. By following these tips, you can make the best decision for your investment and ensure a smooth and successful transaction.

Phil Hogan, CPA, CA, CPA (Colorado)

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@beaconhillwm.ca or via telephone at 778.433.1314. You can also read more about Phil at www.Beaconhillwm.ca/team/about-phil/

This commentary reflects the personal opinions, viewpoints and analyses of the Beacon Hill Wealth Management Ltd. partner providing such comments, and should not be regarded as a description of advisory services provided by Beacon Hill Wealth Management Ltd. or performance returns of any Beacon Hill Wealth Management Ltd. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Beacon Hill Wealth Management Ltd. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Any discussion about taxation is for educational purposes only and should not be viewed as professional advice. Consult your tax professional for tax advice on your particular situation.