Tips for Canadians Buying Homes in the US.

Reblogger George Thoma
Mortgage and Lending with Island Lending Hawaii, LLC | Equal Housing Lender NMLS# 312260 / 1460208

This is a fantastic Blog , regarding Canadians buying in the US.

Keep in mind , Hawaii has different State Laws.

For local details , Call a Hawaiian Lender ,,,

Why not ,,,,,, George Thoma  "Da Money Mann"  with Mann Mortgage on Maui  808-357-9791


Original content by Dan Pittsenbarger 23590

Here's some tips for Canadians to keep in mind when buying homes or other real estate in Bellingham or Whatcom County. These guidelines are actually not limited to Canadians buying in Whatcom County but would also apply for Canadians purchasing real estate anywhere in the US.

First off, there are not any laws preventing a Canadian from buying and owning property in the US. I'm frequently asked by Canadians if they can buy real estate in the US. The simple answer is "yes". All immigration laws must be followed but a Canadian can buy and own real estate in the US.

The most common obstacle on the buying end for a Canadian purchasing property in Bellingham or anywhere in the US is getting state side financing. For Bellingham or Whatcom County, Washington Federal (WA Fed for short) in Bellingham is the only lender I know of locally that will offer US financing to Canadian borrowers. Their phone number is 360-671-1144. Call them for rates and down payment amounts which vary depending on the Canadian borrower's overall scene. Depending on how organized one is and whether or not all of their Canadian paperwork (taxes) is current and to hand, be prepared for a 1 week to 10 day pre-approval process. Do not expect a quicky one day pre-approval process. WA Fed only does the full meal deal (fully documented pre-approval process). Also expect the loan to require a larger down payment (anywhere from 20% to 50%+) and the interest rate to be higher than the advertised downpayment requirements and rates one hears being available to those with US residency status. WA Fed should be contacted to get the specifics on downpayment requirements and interest rates.

To get around the non-optimum financing situation state side, many of the Canadian buyers I work with often refi their Canadian home or other properties in Canada (if they have enough equity there) and pay cash for the real estate they are considering state side. This has the added benefit of increasing their negoiating position on their state side purchase. Nothing like a cash offer to get a seller's attention and consideration.

The other main point to be aware on the buying end of things (although not directly affecting the purchase, but a ramification) is that the Canadian Revenue Agency will require that you disclose any asset purchased outside of Canada that's worth more than $100K. This means that you will have to include form T-1135 each year with when you do your Canadian taxes. And, word is that the CRA is now enforcing this and fining those that do not comply. Here's few links concerning that particular topic.

So, that's about it on the purchase end for a Canadian purchasing a home in Bellingham or Whatcom County.
However, before buying in Bellingham or anywhere stateside, one should be aware of the selling process when one wants to eventually sell their stateside property in the future. In my opinion, the selling side can have more significant issues than the buying end of things. 
When you go to sell, the US IRS can comes into play. That is FIRPTA. And FIRPTA- Foreign Investor Real Estate Property Tax Act - kicks in if you sell the home to anyone but someone with US residency and is planning to make the home their primary residence. If you sold the place to another Canadian or even a US citizen that is buying the home to use as a rental property or a second home, then the IRS will require the title/escrow company to withhold 10% of the purchase at closing (when you sell). And if you don't really owe 10% to the IRS for income tax, you will have to file a US tax return to get a refund on any money withheld for the IRS but not actually owed them. For example, you purchase for $230K and let's say you changed your mind and sold in a year from now and prices haven't changed much and you sell for $235K. With your closing costs on the purchase and closing cost on the sale you would actually loose a little money because "typical" real estate fees here are 5-6% (but are negotiable) and other misc fees come to around 2.5%. So, your total cost to sell is around 7.5% to 8.5%. Thus paying $230K and selling for $235K you would actually only get 91.5% to 92.5% of the $235K sale and actually loose a little bit of money and not "owe" the IRS anything. However, even though you "lost" money the IRS will withhold 10% at closing when you sell - if the buyer is anything but someone with US Residency that is buying the place to use as there primary residence. In the example shown above, you would get all of this 10% back since you didn't realize any profit - but you would have to file a US tax return to get it back. There's a little more to it, but I'm trying to keep it simple and easy to understand. Here is a link or two to info on FIRPTA.
So other than getting a US loan, the reporting to the Canadian Dept of Rev when you do your taxes up there ( by including the T-1135 form) and dealing with FIRPTA when the time comes to sell, I don't know of any other significant issues pertaining to Canadians buying real estate in the Bellingham Whatcom County area or anywhere in the US. Call or email me if you have any questions. This information has been provided as a guide. I am not a CPA or tax guy. Moss Adams at 206-676-1920 or Roy Lentz at 206-734-2172 can help you with any specific tax or FIRPTA questions. 
Of course I'm happy to help anyone from north of the border find just the right property in the Belilngham area. I provide real estate services to all of Whatcom and Skagit Counties.

Dan Pittsenbarger


Managing Broker - Keller Williams Bellingham

Search for Bellingham Homes For Sale                   Bellingham Real Estate


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