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In the past several weeks we have witnessed the United States narrowly avert another economic crisis that had Canada and the world nervously watching to see how the giant would survive. Our neighbours to the south have weaved their way through the economic recession and it has dramatically effected the real estate market. The stories of luxury properties selling in Arizona, Claifornia, Nevada and many other states, has prompted many Canadians to search for their dream homes in the US. In Canada, we have managed to stear through the downturn with minimal damage comparatively. Although real estate experienced some minor decreases, for the most part we have recovered and are witnessing steady appreciation accross the board. The US market offers a risk/reward scenario. There are not many places in the world that you can buy as low as you can in the states. The questions plaguing myself and many other Canadians are:
- Is this rock bottom?
- How do we buy in the US?
- How do we sell in the US?
What I do know is that there are rules for Canadians buying homes south of the border, especially taxation rules! MNP is a Canadian accounting firm that wrote a blog in 2009 highlighting the taxation rules in the US for Canadian home owners. There are a number of key points in this blog and I encourage you to read it if you are or have considered buying south.
Three Key Points:
1) If you reside in your US home for more than 183 days in a calendar year, you must file US Tax Return
2) If you choose to rent your property on a nightly, weekly, or monthly basis, you must file a US Tax Return
3) If you sell your home you will be taxed by the US Government and the Canadian Government
As the real estate market in Canada continues to improve and the economic power of Alberta filters throughout Canada, I wanted to analyze the opportunities that present themselves when searching for recreational, investment, or retirment property. When it comes down to it, your safest bet is to buy Canadian.