THINKING OF BUYING A HOUSE IN THE STATES?
Or do you know someone who is?
Canadians that spend extended periods of time in the United States – called “Snowbirds” because they fly south for the winter – are members of a growing demographic. Many of them buy property in Florida or Arizona, or anywhere that makes for an ideal home away from home. Not all of them, however, are aware of the difficulties they will run into down the line.
The United States, for example, charges a “death tax” that does not exist in Canada. If you are a Canadian that owns property in the United States and you pass away, the U.S. will tax you based on the value of the property, as well as your “world assets” – your home in Canada, your RRSPs, your insurance proceeds, your mutual funds, et cetera. The more you have, the bigger the tax.
Then there’s the issue of a last will – if a Canadian who owns property in the States dies, that will has to be “probated,” or proven. That may not be much of an inconvenience in Canada, but in Florida you’ll need a local lawyer, will have to contend with Florida taxes and legal fees, and the process takes six months.
The issues don’t stop there – what if a property owner becomes mentally incapable and needs someone to sign legal documents on their behalf? Canadian power of attorney may not be effective, and challenging that can be time consuming and expensive.
“All of these problems are avoidable and solvable,” says Howard Simmons, one of the founding partners of Simmons, da Silva & Sinton LLP.
There are also a plethora of questions posed to Snowbirds – how long can you stay in the States to use your property? What taxes apply in what countries if the property increases in value? What tax returns do you have to file?
A U.S. lawyer won’t have the answer to those questions, or the solutions to those problems. At Simmons da Silva & Sinton, they do – to those questions, and any others you might have.
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Brampton, ON L6W 4L2