Thursday, November 11, 2004

International Property Option For Anti-Bush Buyers

If you’re still aching over the Bush presidential victory – all is not lost. There’s plenty of property north of the USA to look at in case you’re considering leaving the country for the next four years.

I was quite humored to hear that Canada’s Immigration web site received an extra 100,000 visitors right after the 2004 presidential election. To think that people would consider leaving a country (one with as many freedoms we have) because their candidate lost is beyond me – but here’s a little research in case they really want to emigrate. (It looks like our northern neighbors are losing quite a few citizens with the Montreal Expos relocation to Washington, D.C., so maybe we can have a citizen exchange to keep relations on a good footing, eh?)

First of all, as with all real estate purchases – you want a really good Realtor to get you started. Fortunately, the American-based National Association of Realtors has several Canadian branches, which means they have Canadian properties on their monstrous web site,, from which to search. Just select a state ON, BC, etc. and then fill in a city and you’ll be on your way.

In Toronto, it looks like their 1 and 2 bedroom condos range in the C$105,000 arena. Fortunately, their economy is such that US$100,000 will convert to about C$115,000. So you actually walk in with more money in your pocket because of the strength of the US dollar over its Canadian counterpart.

Keep in mind, that if you want to benefit from the robust real estate appreciation in this country by holding on to your American property while seeking out citizenship in the Maple Leaf country, you’re going to get hit with some taxes that U.S. citizens don’t pay. (a, well, Canadian law site) reports this insightful information to its citizens who own vacation property:

“If, as a Canadian owner, you rent out your U.S. vacation home, the rental income you receive is subject to a flat 30 percent tax in the U.S. before any deductions for expenses incurred in earning this income. As the tenant must withhold and remit this tax to the IRS, the Canadian landlord does not have to file a U.S. personal income tax return for that year, provided the taxes are remitted.”

In addition, the rental expenses also come with ties to the American government even after you jump the border.:

“To benefit from the deductions for your rental property expenses, you must elect to be taxed within the U.S. on a net basis. Before making this election, you should be aware that you must rent the property for a minimum length of 15 days per year, or the deductions will not be allowed. Even if you meet the 15-day requirement, there are other rules that further limit the amount of expenses considered deductible.

“Having made this election, you will be required to file a U.S. return annually. This election remains in force for subsequent years and can only be revoked with the consent of the IRS. When you file, your rental income will be subject to the graduated tax rates applicable to a U.S. resident on the taxable income realized from a rental activity.”

So if you’re seeking to run from Bush during the next 4 years, it’s going to cost you (at least in the arena of real estate) unless you completely divest of all your holdings. Fortunately, real estate prices in Canada and their appreciation rates are moving up pretty well this year. Average prices and appreciation rates are as follows, according to the Wall Street Journal’s Real Estate Journal:

St. John, New Brunswick – C$114,000 (17 percent)
Manitoba – C$111,000 (15.6 percent)
Vancouver - C$363,000 (14.9 percent)
Montreal - C$184,000 (14.2 percent)
Toronto – C$307,000 (5.8 percent)

At these prices and with the political climate we’re facing the next four years, it looks like for American liberals, Canada homeownership might be the right place, at the right time, for the right price. Michael Moore – are you listening?

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