Allison Lampert contacted Matt for his take on this new proposed bill and what it means for Canadians, for the Real Deal business blog on the montrealgazette.com.
U.S. residency could be taxing for Canucks
The Montreal Gazette, Real Deal Business Blog
October 24, 2011
Recent reports that foreign buyers of U.S. homes could one day get automatic visas is good news for Canadian buyers – albeit with one big caveat. The impact of cross-border taxation could make the price of a U.S. residency a lot more expensive than a $500,000 house, experts say.
As a way to bolster the weak housing market, two senators want to give a U.S. residency visa – but not the right to work – to all foreign buyers spending $500,000 or more on American real estate, the Wall Street Journal reported last week.
Canadians are among the largest group of non-Americans buying homes in the United States – accounting for a quarter of all foreign buyers – often in states like Florida that were hard-hit by the housing melt-down. A visa would allow Canadians to reside in the United States for longer than the current six months.
Having to return to Canada after six months is a frequent complaint among Canadian buyers of U.S. homes, said Matthew Altro, chief operating officer of Altro & Associates LLP – a firm specializing in cross-border tax, estate planning and real estate.
“This is not ideal for our clients, or other Canadians who have properties in the United States,” Altro says. “Limiting them to six months a year is a stumbling block. This would be opening a gateway to many.”
But living in the United States for more than six months would also expose them to Canadian departure taxes when they leave the country, along with U.S. estate taxes if they pass away South of the border.
“With proper planning, before you move, many of these problems may be reduced or eliminated,” Altro said.
Indeed the U.S. proposal is not so different from a program that already exists in Canada, observed Peter Goncalves, a financial planner with RBC.
The Federal Immigrant Investor program fast-tracks permanent residency for wealthy individuals who invest in Canadian financial institutions.
“This U.S incentive may want to facilitate the courtship of the same type of wealthy foreigner with the added policy objective of stimulating the U.S. housing market,” he said.
Click here to read Matt’s blog about this important topic!