In a recent poston the “IRS Boogieman”, It seems I stirred the pot. It is not my intention to frighten people away from buying American property. My intent is to get people to think about doing some additional research before they buy property south of the border.
The IRS requirements if you buy in the U.S. are simple. They require lifetime filing of returns even if you sell the property. Failure to do so may incur penalties that may add up over time, and long after you’ve sold your property it may come back to bite you or your estate. My understanding is that you can do a zero filing and that will suffice, but I’d recommend you get expert advice on that.
On a side note note a few things my American colleagues have said have made me think that while right now they appreciate the sales generated by Canadian and other foreign investors, there may come a day when that ownership is resented. Remember laws change over time and someday the political landscape south of the border could lead to changes to tax and other laws making foreign ownership of property a little more onerous still. It is unlikely that the current Canadian invasion will be looked upon as favorably if affordability in those markets deteriorates, and investment properties that are used only sporadically become blights on the neighborhood.
Wow that seems a stretch to suggest the future gov’t of the USA will implement laws to deter foreign ownership of properties because foreign owned properties are a blight on the neighbourhood! There is a an alternative view that would suggest that any move to deter foriegn investment has a negative impact on the market and results in a drop in property prices. Not sure what gov’t would think that is a good idea.
Sounds like fear mongering to me. On the one hand you say you are simply asking people to do additional research but then you conclude with a scenario where US laws change making foreign investment more onerous. Your reasons for this view are bewildering – affordability becomes an issue(how long into the future are you looking???) and because investment properties used only sparodically become a blight on the neighbourhood. I would have thought investment properties only used sparodically would cease to be a good investment and will be sold any way. And since when has the aesthetics of a house been a motivation for international investment laws?
Good blog but personally I think you were promoting self interest on this topic and got called on it. Keep up the other good work.
First, if you have enough money to buy investment properties in the States, you can probably afford to hire a good accountant/tax advisor.
Also, there are tax differences based on whether you are an American resident or just a visitor. Canada taxes only its residents. The United States taxes both citizens and residents.
Does this lifetime filing requirement that you talk about occur only if you become a U.S. resident, or also if you are just a visitor?
Do you have a link to this information (on an accounting site or something), because I haven’t been able to find anything about it on the internet.
Give me a break…Fearmongering..How about just stating the facts in a dramatic fashion. I suppose if I said “everybody go buy down south” that’d make you happy. Many of my colleagues and friends have purchased properties down south and no they didn’t have advisors, but that’s their problem.
Many of them certainly weren’t aware that they couldn’t pick up a paint brush and do any renovations on their own properties.
I stand by my comments and understand many will not be happy pointing these things out. If you don’t want your investment down south to sink then do some research and get some good advice.
And just in case you’re wondering there are also exceptional properties North of the border worth looking at from, Brodeur lakes in Nova Scotia to the interior of B.C. There are definitely good opportunities that are catching my eye.
There are definitely complex tax issues involved with moving to/living in/owning property in the states. I just haven’t seen/heard/read anything about lifetime filing requirements (assuming you only buy property and don’t become an american resident), and I’d like to know where you heard/read it.
Is this all just rumours and speculation? Or can you back up your claims?