Learn more about the often forgotten tax planning that is important prior to buying a U.S. property for Canadian. BRIAN BURTON of the Calgary Herald discusses in his article:
One thing is certain for all Canadians who buy homes south of the border, he says: “At some time or another, we will all have to deal with the IRS (United States Internal Revenue Service).”
As Canadian “Snow Birds”, flock south for the winter, they are encountering the fact that the cost of Florida real estate has drastically declined in recent years, making the idea of owning property in the sunny south increasingly palatable. One of the biggest fears of owning foreign real estate is the question of what happens when I die?
The recently passed Tax Relief Act, in the United States (“US”) has a $5 million indexed exemption and a 35% rate for tax payable. As a result, Canadians who own US real estate held personally will not be subject to U.S. estate tax where their worldwide estate is less than $5 million at death. However, in 2 years the exemption drops back down to $1 million unless there are new tax law changes. For the purposes of this article we will discuss purchases in Florida.
In essence do we need to subject the Executors (Estate Trustees) to dealing with IRS and disclosing the full value of the deceased’s assets and getting into all of the myriad of cross border tax issues that appear the minute we need to deal with the US Authorities? Not if we can avoid it.
Canadians who purchase property in Florida have certain advantages: first, Canada and the US have a tax treaty that prevents Canadians from paying double tax in many circumstances. This will protect Canadians from double taxation in many circumstances, on the sale of the property. Second, for both tax and succession purposes the property can be placed into a carefully constructed Florida family trust.
In order to determine the eligibility of a given purchaser for such a vehicle it is necessary to meet with a legal and/or financial professional (tax accountant) familiar with all of the complex issues that affect the area and in order to make the professionals understand the individual needs of the person or family requiring the advice. This will allow for the careful planning necessary to make these vehicles work and comply with the tax legislation of both the US and Canada. The cost to establish the trust and administer it, is a small price to pay to avoid the extremely expensive time consuming, frightening and complex world of US tax.
Now is a great time to purchase land in Florida – if done properly. Speaking to a law firm such as ours together with the right tax accountant can greatly decrease your potential risks in falling afoul of either the Canadian or US taxation authorities When done properly the Florida family trust will provide peace of mind and security. In other words: use a Florida family trust to shelter you from the cold!
By: Jayson Schwarz and Aaron Grinhaus
Jayson Schwarz is a Toronto business and real estate lawyer and partner in the law firm Danson Schwarz Recht. Aaron Grinhaus is his Associate. If you have questions, use the web site, www.dansonschwarz.com, email us at info@dansonschwarz.com and give us your questions, concerns, critiques and quandaries.
About 54 percent of home purchases in Palm Beach, Broward and Miami-Dade counties were cash buys in the final quarter of 2010. That’s about 7,530 homes and condominiums between October and December that were paid for with Benjamins instead of borrowing, according to real estate analysts at Zillow.
Read the full article here as posted by the Sun Sentinal in Florida
California is traditionally the first state in previous real estate depressions to signal a turn around in the housing market. In an unprecedented turn of events, Florida is pulling out of the housing downturn first.
Moderately growing home and condo sales in Florida that have lasted for more than a half year is signaling real estate in Florida may be taking a turn for the better. “The increase in sales in the Miami market over the last seven months shows a clear strong upward trend indicative of a market recovery,” said Rick Burch the Chairman of the Realtor Association of Greater Miami and the Beaches. The sales of single-family homes have shown gains every month since August 2008 and condominium sales have increased every six out of the last seven months.
Miami had a 70 percent increase in existing-homes sales including single-family, townhomes, and condominiums for February 2009 compared to February 2008.
The number of days a property stays on the market and inventory levels has also decreased substantially. In August 2008, the total number of listings on the market was 43,058 that number had dropped to 35,562 by March 2009. “We expect sales to continue to rise in the coming months, and once distressed properties are not a major force, prices will begin to rebound to normal levels,” said Burch.
Record population growth in Florida may contribute to the more promising market after nearly a four year slow down in home sales. The Florida real estate slowdown started after the state was battered by a series of hurricanes and the financial crisis. As a result Florida real estate sales turned sluggish before anywhere else in the U.S.
Palm Beach County home prices continued to fall in February, but sales spiked as bargain hunters snapped up foreclosures and short sales, the Florida Association of Realtors.
The median price of a single-family home in Palm Beach County was $228,100, down 34 percent from a year ago. However, 532 homes sold during the month, up 33 percent from a year ago.
Buyers are targeting lower-priced homes that sell for far less than they fetched in 2005 and 2006. “Bargain properties are selling, but expensive Palm Beach County’s homes attract few buyers”, said Steven Presson, an agent at Corcoran Group Real Estate in Palm Beach.