Money & Career

Is now the time to buy a U.S. vacation property?

We never had a cottage when I was growing up — but my Mum did have a condo in Florida. While all my friends headed north for the long weekends, we’d book a cheap flight and spend our time on the beach — winter and summer, it was a great place to be.

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Masterfile

We never had a cottage when I was growing up — but my Mum did have a condo in Florida. While all my friends headed north for the long weekends, we’d book a cheap flight and spend our time on the beach — winter and summer, it was a great place to be. 

With homes in the U.S. selling at all-time lows and the Canadian dollar trading at all-time highs, my husband and I have been dreaming about buying our own piece of sunshine. Whether it’s Florida, Arizona or another state, there are some tempting deals to be had, especially compared to cottage prices where we live — they’ve skyrocketed way out of our reach. There are also a lot of properties to choose from, with some four million properties on the market today.  
What’s holding us back (aside from winning a lottery) are the tax implications — sure, house prices are cheap but owning American property means taking on a whack of U.S. tax obligations. If you own a U.S. property then you have to file a U.S. tax return in addition to your Canadian one. And if you want to rent it out, you need to report any income in both the U.S. and Canada (you’ll be on the hook to pay tax in both countries). 
Plus if you sell your U.S. home, you have to file a U.S. and, in some cases, a state income tax return. Canadians are also subject to a 10-percent withholding tax on the sale. All that takes a big bite out of your initial investment if you need to sell. 
We’ll definitely keep dreaming about buying a condo in Florida — but until we know we can handle the additional tax burden (not to mention the added cost of owning when the U.S. dollar finally rises again) we’ll stick to renting.