Last weekend I was doing an open house in Leslieville when a gentleman walked in and asked where the up and coming neighbourhoods are in Toronto. In other words he was inquiring where he should invest his money. I gave him my top 3 areas in the city that I’ve had my eye on, but then our conversation turned towards purchasing properties down south.
Thanks to my friend Jann Flowers of Coldwell Banker in West Palm Beach, I’ve been able to glean a lot of information about the state of the American real estate market. It is certainly difficult news for Americans but could be seen as an excellent opportunity for Canadian real estate investors. Millions of foreclosures have forced down home prices and more are expected this year. Nearly 40 percent of the sales last month were either foreclosures or short sales, when the seller accepts less than they owe on the mortgage. Analysts forecast that the situation could worsen when the “shadow inventory” of homes is taken into account. These are homes that are not on the market yet however are in the preliminary stages of foreclosure. For February 2011, sales fell in all four regions of the United States, by 12.2 percent in the Midwest, 10.2 percent in the South, 8 percent in the West and 7.2 percent in the Northeast.
My interest has always been in Florida. It’s just hours from Toronto. Flights are generally cheap and available. The weather and the great shopping make me envious of Floridians. But Canadians have to been very careful with regards to U.S. occupancy laws. Remember, we can only be in Florida for up to 6 months without permission from American authorities. Even one day over this six month limit can cause tax issues and health-care problems both here and there. Acquaintances of mine came dangerously close to overstaying their permitted time. Believe me, the boarder authorities keep track of your comings and goings. Canadian buyers also have to deal with high taxes and high insurance rates in Florida. My parents who winter in Florida have always been reluctant to buy for this reason. However, with the incredibly low cost of buying now, this can offset these costs. Don’t forget that insurance rates are lower on properties built after 1992 as the building codes changed forcing new development to be more resistant to high winds. As a rule of thumb, Florida state property taxes are more or less $1600 per year for every $100,000 of your purchase price. But before you book your flight and start home hunting remember to inquire about cross border trusts, tax laws, and estate planning. It is imperative that you get qualified legal advice from a lawyer who is an expert in cross border real estate and state law. Good luck and remember this article is for informational purposes only. It is not tax or legal advice.
Maybe I’ll see you down there!