Posted by RobH_WA on September 08, 2003 at 23:59:59:
…I have property in Canada.
Some things come to mind in terms of differences with domestic investing, but given the urgency this is not exhaustive and hopefully they can be reviewed/added to by other contributors:
Get any loans in CAD not USD. You dont need an FX risk on top of the other risks. If you want to see a history of the FX rate go to Historical Currency Converter | OANDA
Residential loans are for a max of 25 years, not 30.
Fixed means fixed for a period of time not the life of the loan.
Withholding tax is payable on disposal. Basically this means you pay estimated tax in the year of sale and you get a refund in the next year (same as a non-US investor pays in the US). End result is you pay same tax, but your last 10% or so of cash flow is delayed.
Having said you pay the same I believe there is some type of non-resident surcharge. It is not a huge one, and I dont have the details to hand.
You may want to set up a Canadian entity to hold the property. I dont recall the specifics but we gave up using a US LLC. Check with your attorney. Whilst you are doing that you may want to think about a local will. You trade off the cost of the setup vs the risk that the Canadian authorities can come after non-Canadian assets.
Given all of the above I suggest you schedule a 1-2 hour meeting with an accountant who is familiar with non-resident purchases. He should be able to correct any errors I have made!
advice for Canadian investment - Posted by Del-Ohio
Posted by Del-Ohio on September 08, 2003 at 22:27:19:
Checking in with the real estate investors of the world to see if there is anything special we need to know before purchasing property in Canada.
The scenario. A couple weeks ago I was bribed by a friend to go to Bobs Lake in Canada for a few days.
Well as usual, I cant just vacation without looking at some property, as soon as I do that the ideas start churning.
Found a 100 acres of property that has some “preapproved” splits at a great location on the lake. If we split a couple more parcels this looks like a VERY profitable venture. We already have a buyer for one waterfront lot if we put this deal together.
What I have done at this point.
Had one of the top brokers in the area give me a “FMV” of the lots that have already been approved by the township to be split. This broker would list the lots.
Hired an attorney/solicitor that the Realtor reccomended, someone familiar with the area and real estate transactions. Already recieved a “preliminary closing statement” with all the fees and items involved.
We, partner and I, are heading for Canada Wednesday morning, spend a couple days up there to convince him this would be a good project for us.
Wed 4:00 PM, Meeting set up with the township office to see what we can do with the land, review potential splits, setbacks, frontage required, lane easements that type of thing.
Evening, drive the area to familiarize partner with area, properties.
Thu. 9:00 AM, Meeting with fellow familiar with area for a boat tour, get lakefront view of properties and become more familiar with the qualities and characteristics of the community.
Thu 11:00 AM Meet with Realtor to walk property, more evaluation, determine pricing, and look at more comps.
Thu 2:00 Give attorney go ahead to draw up the offer if everything looks good. (this may sound a little backwards but was suggested by attorney and Realtor, we hand write any changes to the contract)
Thu 5:00 Pick up offer/contract from attorney. Then drive four hours to sellers city.
Friday 8:00 Meet with seller to present and negotiate offer.
Anything specific I as a citizen of the US should know about buying and selling property in Canada?
We would be selling one lot to a friend from the states, sell off at least five lots and keep one to build a cabin or two on that we would use as a vacation spot and rent it out by the week during the rest of the time.
Any comments about, profits made in Canada being transferred into the states?
Taxation issues that I should be familiar with?
Building issues that the township/Realtor or solicitor may neglect to tell us about?
Anything else I should ask about that I might not normally consider if I was doing a similar project in the states?