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EDMONTON - The time is almost perfect for Albertans to buy property in Arizona -- but it could get even better says Brian Wruk, co-author of The Canadian Snowbird in America.
As U.S. mortgage-interest rates rise, "foreclosures are at all-time highs," in California, Nevada, Arizona and Florida, he says.
The Canadian dollar also is high -- and our temperature is low. "All the moons are aligned," Wruk says.
But he thinks U.S. prices could drop further because a large number of variable-rate mortgages are due for renewal in the next three months -- at higher interest rates.
"Mortgage payment are going up, on average, by 35 per cent." Wruk says. "Add an extra $100 per month for higher gasoline prices, and that's pushing a lot of people into foreclosure."
Here's another reason to consider buying U.S. vacation or retirement homes, he says: "Canadian cottage prices are nearly going through the roof."
At Sylvan Lake, some properties are selling for $1 million or more, Wruk says. "People can sell there, buy here (Phoenix, Ariz.) for $500,000, and put the difference in their pocket."
Wruk in Phoenix, and Ritchie, in Calgary, are partners in Transition Financial Advisors Group, which does investment, tax and estate planning.
U. S. law requires the filing of an estate tax return for anyone who dies holding more than $60,000 worth of U. S. property, Wruk says. But actual taxation applies only if the estate exceeds $2 million.
Canadians who earn U.S. rental income must report such income in both countries, Ritchie says. If they pay U. S. income tax, however, they can claim a foreign tax credit on their Canadian return to avoid double taxation.
Ritchie conducted two recent workshops in Calgary, and two in Edmonton, speaking to more than 600 people about cross-border financial planning.
"I have been approached by people in Edmonton, asking about taking out a home equity loan to buy rental property in Arizona," he says.
Despite the bargain prices, Ritchie cautions that borrowing to invest in U. S real estate can be risky. "The rental market is tough," he says, so owners may not easily find reliable, year-round tenants who will pay the rent they need to cover their loan payments.
The Canadian Snowbird in America is published by ECW Press at $22.95.
rchalmers@thejournal.canwest.com
SNOWBIRD STRATEGY
Points to keep in mind when you travel to the United States:
Take your meds: But remember that drugs with codeine require prescriptions in the U.S. If you must take prescription medicine, ask your doctor for a letter explaining why and the recommended dosage. Take only as much as you need.
Satellite TV: If you want to watch Hockey Night in Canada, you'll need a Canadian satellite receiver. BellExpressVu says it's illegal to use their system in the U.S. -- but StarChoice says there's no problem.
Gambling disasters: Win or lose, keep a diary of dates, locations, games played and outcomes. Your winnings will be taxed but you can claim a refund by proving offsetting losses.
Driver's licence: Be sure your licence, vehicle registration and passport will not expire while you're away.
Travelling with a pet: You'll need a health certificate from a vet and a letter confirming your pet is from a rabies-free zone or, for a dog, proof of a rabies shot at least 30 days earlier. Don't even try crossing with an exotic pet.
Perogies: Eat your fill before you go because, in the U.S., you won't find perogies, ginger beef, Oh Henry! bars, HP Sauce, Shreddies, Clamato juice -- or Canadian beer.
Source: Terry Ritchie with Brian Wruk, The Canadian Snowbird in America
