Thinking about becoming a snowbird? Things you should be aware of.

Interest rates continue to hold steady with every one waiting with anticipation for the next drop in rates by the Bank of Canada on April 22, 2008. So far it looks like things have settled down a little and the previous 1/2% target may get down graded to a 1/4%, but either way it is still going down. I will let you know on the 22nd what happens.

Recently I have had several of my client's asking about the possibility of purchasing homes in Florida, as prices in the US continue to drop.

I came across this article in the Toronto Sun this morning and thought it would be of interest to those who are thinking about theses warm winter nights watching the sun set over the Gulf of Mexico . Not that I am a regular reader of the Toronto Sun, but their Money section occasionally has some interesting articles you don't find in the other papers.

Buying property in the U.S. isn't like buying property in Canada. There are many rules you need to be aware of when investing in the U.S. For example:

If you plan on renting out the property you buy part of the year, you must have American Social Security Number and file a U.S. tax return.

You will have to pay higher property taxes in Florida if you are not a permanent resident.

You have to pay a 45% estate tax on your American property if your worldwide assets are more than $2 million when you die.

You also have to pay a gift tax ranging between 18% and 48% when you pass the property on to your survivors.

Each state has different rules about withholding tax if you sell the property as a foreign owner.

In addition, you are taking on a huge currency risk. If the Canadian dollar goes back down in value against the U.S. dollar again, you will be taking a hit on the value of the home you buy.

The bottom line is that while it may seem to be an attractive time to buy in the U.S., you need to get professional advice from experts who know both Canadian and American tax, estate and real estate laws.

While it would be nice to enjoy an Oceanside condo each winter, you wouldn't want any nasty financial surprises to take the joy out of your purchase.

Thanks,

David Kendall
Senior Mortgage Consultant