We're now the largest non-American buyers of U.S. real estate. Many purchasers, however, only have a vague idea of what they've committed to from a tax and legal standpoint.
"There's a presumption among people that the laws must be the same in the U.S. and Canada. A lot find out otherwise only after they buy," said David Altro, a Montreal lawyer who specializes in crossborder tax, property and estate-planning issues Altro wrote a 2009 guidebook titled Owning U.S. Property the Canadian Way, which he is updating because of significant changes in U.S. estate tax.
For example, starting Jan. 1, 2013, the exemption level on estate tax for owners of U.S. property drops to $1 million in worldwide assets from $5 million, and the maximum tax rate on U.S. property rises to 55 per cent from 35 per cent.
Although the threshold may still seem high, Canadians must include the value of their RRSPs and life insurance payable at death, which pushes more people into the tax zone.
Altro said one way for Canadians with significant property to minimize hassles, taxes and property transitions is to create a cross-border trust, with one or more people as trustees.
Source: Vancouver Sun