Canadians are continuing to head overseas to invest in real estate. The resilience of housing prices here and a strong Canadian dollar are making overseas investments look more attractive than those in our own nation. It is much safer to invest in a market such as the United State or Mexico, when real estate prices in those nations have all ready dropped to historical levels. Having a warm weather vacation home is a great long term investment and feels great when you tell your friends and relatives about it! It is the type of investment that you can enjoy while it appreciates in value. Investors have decided that the collapse of the U.S. real estate market is an opportunity they will take advantage of. A major shift in personal assets such as this needs planning and financial re-structuring. In some cases, houses abroad have been purchased without having to use local banks in the respective country. Buyers have sold their Muskoka cottage, or used savings, skipping tougher mortgage qualification process entirely, and paid cash for their home away from home. According to the U.S. National Association of Realtors (NAR), the number of Canadian buyers who used cash to pay for U.S. properties jumped to 81 per cent in 2009 from 47 per cent in 2007. Canadians were also twice as likely as any other foreign buyers to pay in cash. A recent report found that risk averse Canadian households are sitting on up to $1-trillion in cash and near-cash holdings.Homes in Mexico are a fraction of the price of their nearest Canadian counterpart, and combined with the higher interest rate there, encourages Canadians to pay cash for their Mexican properties.The number of Canadian buyers of U.S. properties eased to around 27,000 this year from 40,000 in the NAR’s 2008 study, but remains well above 2007 levels, when exchange rates and housing costs were not as favourable. Canadians were the biggest international buyers of U.S. real estate in 2008 and 2009, ahead of the United Kingdom, Mexico, India and China.Recent changes to the Canada-U.S. Tax Treaty helps prevent the double-taxation of Canadians, however all investors should become familiar with the local laws and tax system in the nation they choose to invest in.
Canadian banks, in general, will not provide mortgages on overseas properties. So, Canadians who choose to get financing here need to apply for a line of credit or raise the mortgage on their property in Canada. Consulting an expert with knowledge of both nation’s tax, mortgage and estate planning laws is a good idea for those wanting to take the plunge.
Most important to your purchase is to have a connection with the area you are investing in. Learn about the customs, the people and life there. You must love living in your vacation home even more than your primary home. This, more than anything will make overseas investment a profitable venture.
LloydsTSB is the largest UK bank…currently we have a Rep office in toronto which specializes in International Accounts and International Mortgages…we will finance purchases for investment and retirement homes in 11 different countries…if interested please call me at 416 642 5613…Cheers