We've helped a large number of Canadian buyers in the Seattle area over the past couple of years. Many of our clients come down from Vancouver and Victoria, British Columbia, to buy second homes and investment properties in the Puget Sound region. According to the National Association of REALTORS, this phenomenon has carried across the rest of the country.
The N.A.R. reports that Canadian investment in American real estate went from 11% in 2007 to 23.5% in 2008. Canada became the nation with the largest foreign investment in U.S. real estate for the year. Much of the investment has been attributed to the Canadian dollar's relative strength vs. the American dollar which has given Canadians far more U.S. purchasing power than they had in the past.
Potential Canadians buying homes in the U.S. should be aware of some of the intricacies of buying U.S. real estate:
Get your financing done first. Financing can be tricky - most of our clients get their funds in Canada and bring cash to the purchase. There are a select number of American lenders that will lend to foreign nationals, and many require larger down payments. Work history and international credit reports can take time to verify.
Setting up an American bank account will save you time. Escrow companies, some banks, appraisers, and inspectors may not accept a draw from a foreign bank - even a cashier's check. Wiring your money to your American bank account well before closing will save everyone a lot of anxiety.
Try to be local for your closing. Escrow documents that must be mailed back and forth internationally can delay a closing by a week. If you're buying a distressed home, closing dates can require hands-on interaction between a buyer, seller, and a finicky lender or two. If you can't be local, be available for quick sign-and-fax responses.
Consult a tax advisor. If you buy and sell U.S. real estate, you'll be liable for U.S. taxes. Capital gains tax, income tax, and even estate taxes could apply in certain situations. Make sure you're aware of the full costs.
Sam DeBord and Brian Wiegand
SeattleHome.com (206) 431-5900
Seattle Real Estate Brokers - RE/MAX Connected
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