Guidelines for Canadians purchasing property in the U.S.

The choice of buying real estate in the United States is a big decision. While the process isn´t impossible, it is highly recommended that you seek the advice of a trained professional to help you though the buying process. Here are a few tips to making your property buying experience easier.

• Make sure you are briefed on the specific laws and regulations of the state in which you´re looking to buy. Laws vary widely across the US from state to state, so make sure you have the most up to date information on the particular location you´re looking to buy in.
• A great tip is to try to find financing in the United States before you try looking for a particular piece of property. You will have a much easier time wading through the buying process if you have financing already set to go. This can really help to expedite the buying process.
• Make sure you have at least one appraiser take a look at the property you want to buy before you sign any documents. The law tends to side with the seller in these situations so if you buy property and then find out something isn´t ideal, you may not have any recourse. The one exception to this rule is if the seller outright lies or withholds any information about the property. Otherwise, it´s a buyer beware situation.  Don´t be afraid to have multiple appraisers look at the property if you can afford it.
• Make sure you´re fully prepared for the closing date. By the closing date, you must have all inspections, appraisals and all of your work done on the property since the closing date is when the official sale happens. If you still want to have the prospective property looked at, make sure you have it taken care of before the closing date. In most cases, the closing date is on or about 30 days after a contract was signed. This is not always the case, however. It is more likely to be 30 days when dealing with a residential property than a commercial one.
• Make sure you buy title insurance. Title insurance protects you in case someone in the future claims to have legal right to the property you just bought. It´s wise to have this type of insurance bought before closing on the property. Title insurance is especially important when buying land or property in a foreign country because it protects the seller from unscrupulous and dishonest sellers.
• Be prepared to pay your share of that year´s property taxes. Depending on when you buy the property, you will be responsible for paying the rest of that year´s property taxes. These can be quite expensive and are usually due at closing.

Buying property in the United States can be a fun and exciting process. But be aware that there is a strict set of processes that you must go through. The best advice is to seek the help of a real estate expert or a lawyer to help you though it.

Guidelines for Canadians selling property in the U.S.

If you have chosen to sell the property that you own in the United States and you´re not a citizen of the US, there are a set of guidelines that need to be followed. The best advice, however, is to consult an expert in the field of real estate for the latest and most accurate information.

Most of the implications of a non-US citizen selling property they own that is located in the US has to do with taxes. A law was passed in 1980 called FIRPTA (The Foreign Investment in Real Property Tax Act) that mandates that those who sell property in the US but are not residents must fill out a tax return as if they were a resident themselves so that the proper amount of tax could be taken out of the sale.

However, the vast majority of sales were going unreported, so a change in the tax laws happened in 1984 that said that 10 percent of the gross sale amount of your property much is paid out to the Internal Revenue Service. You would file form 1040NR, called the Non-Resident Alien Income Tax Return, for the year that you sold your property. If you are married and the property that you sold in the United States was in both of your names, then you would be required to both file the form 1040NR. On this tax form, you would be asked to report any and all income that you received from sources within the United States. What the government is looking for is capital gains that you made from the sale of the property, as well as any interest or any other type of income that you get from sources inside the US. You will be asked to pay taxes on the capital gain you received from selling your property. The tax rate currently sits at twenty six percent of the capital gain.

The way the United States government figures out capital gains is the amount of essential profit made off the same of your property. A simple mathematical equation can be used to figure this out. First off, add the price you paid for your property, add in the cost of any and all improvements you made to the property, add in assessments that you might have paid for sewer and water services and then subtract the proceeds from the net sales of your property. The resulting number is your capital gain. Unfortunately, you cannot include things like interest paid on the property, home owners association dues or property taxes towards your expenses. To figure out your net proceeds, take the price you got for your property and subtract expenses like closing costs, excise tax and the sales commission.

Selling your property in the United States is a fairly straight ahead process, the only thing you have to watch for is tax implications. For more information on selling your property in the US, consult a CPA who is an expert in the real estate business.