Purchasing Primary Residence & Rental Properties in the USA

Hi. I am a professional and will likely move to the USA within the year (California if that matters) under a TN Visa (I have had these in the past, etc).

My questions are:

1. Is there a "typical" %age down payment required to purchase a primary residence in the US these days?

2. How difficult is it for a Canadian to obtain a US mortgage?

3. Is it possible to purchase rental properties in the US (ie -- Scottsdale, Hawaii) when I am:
a. still in Canada
b. residing in the USA

4. Are there any negatives to owning rental properties in the US vs purchasing in Canada?

Thanks for any help.

1. 25%
2. Not difficult at all if you ahve 25%
3. Yes, yes
4. You cannt do any work on the property, so you need to hire workers. Since you will pay tax on the rental income in 4 jurisdictions if you are living in Canada,(state, IRS, prov, Cn fed), the chances that the credits will all work out is unlikley, so you will pay a ittle higher tax than if your property was in canada only. When you sell, same problem on the capital gains. Problem goes away if you are not Cdn tax resident during this period.

Capital gains aren't that big of an issue, because the current long-term CGT rate in the US is zero. There is a withholding tax requirement in the US the purchaser (not you, the person who buys it from you when you sell it) has to comply with on Form 8288, however (a) they don't have to do it if you can show them there is no tax (which there isn't currently) and (b) they don't have to do it if the value of the property is less than $300,000 and they intend to live in it for at least the next two years.

However - because real property is considered "effectively connected with a US trade or business", you still have to file a 1040NR and a schedule D with the IRS, even though it will be covered with zeroes.

So basically CGT other than that piece of paper will work the same as it would if the property was located in Canada - unless the State has a capital gains tax and many do. But you can claim a foreign tax credit for that on T2036.

As far as mortgages go it is getting more and more difficult to get them, I spoke to a mortgage broker at Bank of America in February as I recall and she told me they did still do them for Canadians but she knew that BoA was the only large commercial bank still doing them in the US and that it wouldn't surprise her if they stopped.

If you really want the answer, talk to Bank of America, they will tell you what the down payment will be, I think she said 35% actually not 25%, might not be remembering that correctly though.

As far as dealing with rental income, I suggest you have a read of CRA P151, which is a bit out-of-date but will give you the general gist of it. http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

If you are buying property for permanent resident than you can buy it very easily but you just have to apply for permanent resident to get the permit of living in USA. But maybe have to face some tax issues that have some different rules for foreigners.


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Miami Beach Luxury Homes

Yes, there are some restrictions. Almost all mortgage lenders require that you are a US citizen or a permanent resident (a green card holder) before they will lend you any money because they want to know that they can find you to get their money back. What you can do is:
1. Use Canadian property as collateral for a Canadian mortgage. This requires that you have a lot of equity in some property in Canada of course.
2. Sell your Canadian property and use the proceeds to buy in the US for cash.