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  • Investing in foreign (Canadian) properties

    Does any US members have experience with owning a Canadian property? I am thinking about purchasing a Canadian condo in addition to already owning a US home (2/3 mortgage left). Mainly as an investment (hoping if value will appreciate), passive income (rent it out while I can), but also because I might want to one day live there part of the year when I reach FI. My main questions are, does it sound ridiculous for being over complicated, any issues with tax if I have Canadian rental income, what happens when I want to sell etc. I did use google but just looking for some feedbacks.

  • #2
    Lots of US citizens purchase real estate in foreign countries.  I don’t have any personal experience with this, but I am sure the information on taxes and risks should be easy to come by.

    On the other hand, I have been hearing that Canadian real estate has been on a tear and is overvalued.

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    • #3
      I will channel my inner @Crixus, so here I go.

      Canada is in the midst of some incredibly bubbly real estate issues in some cities/regions (capital flight from China), its starting to pop in several. The banking and insurance system will be having some trouble there as well, and these cracks are starting as well with several big name banks and mortgage something or others starting to have serious issues and outright fraud bring them into trouble.

      The prices there are absolutely awful. Lots of scams in general in canadian markets, they have some kind of regulatory issue that is just a hotbed for fraud. Be very careful is all.

      What part of the year do you plan to live there, August?  

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      • #4
        In Vancouver and Toronto the markets are almost certainly overvalued and a correction could happen at any time.  This is what 'experts' have been saying for the past 10 years.  There was no housing downturn in 2007-2008 in Canada and the Toronto and Vancouver markets have not had a downturn since the early 90s and this was relatively small.  In Toronto, residential real estate easily outpaced inflation through the 80s.  Hence, the predictions for a big downturn.  In both markets the suspicion is that foreign money is driving the increase and both cities have recently imposed significant taxes on foreign non-resident purchasers.  One of my colleagues has his house in a Toronto suburb listed for 7 million!!  It is nice but not a mansion and the listing actually suggests that it might be reasonable to tear it down and build a new house! Ouch!  Most of the rest of Canada has not seen anything near the price increases that the Vancouver and Toronto areas have. So in short, I wouldn't be buying into either of these markets at this time - I almost took a job in Vancouver in 2005 - housing prices were insane and were one of several reasons for not making the move.  Would have been the most lucrative investment I ever made!  No guts, no glory!

        We have never bought a US property because of the hassles involved so you know where I would come down.  On the other hand, the exchange rate isn't too bad at the moment and an ocean front place in the Maritimes could probably be had for a song. Finding suitable tenants might be problematic.

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        • #5
          Thanks for the feedback. I agree that in many cities, such as Vancouver, the property values are Way overvalued. I am more looking at some outskirt areas where hopefully the values are not affected yet (if there is such a thing) that I can afford. But the mentioned scam is a little alarming.

          On a side note I wonder if prices in Vancouver are in a "bubble" or if they would ever fall. It's like who would have thought Manhattan prices would have gotten to what they are now. Only if I have a crystal ball. I'd love for the Vancouver market to tank so I can snatch up a place. Meh

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          • #6




            Thanks for the feedback. I agree that in many cities, such as Vancouver, the property values are Way overvalued. I am more looking at some outskirt areas where hopefully the values are not affected yet (if there is such a thing) that I can afford. But the mentioned scam is a little alarming.
            Click to expand...


            If the market should collapse, what would happen to the value nearby properties that are not as highly values (less desirable)?  They would decline significantly AND take substantially longer to recover.

            If the real estate market collapses in a particular city, there will be a period where there are few if any buyers.  The first wave of new buyers will be looking to scoop up the best locations at a distressed price.  They will have no interest in an outlying area or a marginal neighborhood.  In other words, you may be waiting 10+ years to be able to sell the house at levels you bought.

            For example, one of my former neighbors bought a house in the Chicago suburbs for $170k in 2006 at the top of the market.  The units in his neighborhood are now selling in the $130k range.

            Of course, that does not even consider the costs of holding on to properties for years until you are ready to use it.

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            • #7
              I have seen lots of charts on the WSJs blog about how overpriced Canadian real estate is now.  Agree with above posters that you might be underwater very soon.

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              • #8
                Vancouver has recently implemented 15% extra taxation on foreign investors. Vancouver also recently implemented an extra tax on landlords who are doing short term rentals (less than six months.) I think GTA (Toronto) is considering implementing some of these extra taxes. PM Trudeau recently seems out to tax entrepreneurs and investors and land lords and land owners and small business owners to make everything "fair" to all Canadians. As a former Canadian, now happily living in Texas, I would advise staying out of Canadian real estate investments for now until the political climate moves away from this pseudo Communism taxing rage that seems to have recently taken place. Take a look at Greaterfool.ca and it will bring you up to date on Canadian politics and real estate issues. I admit the Greaterfool blog is biased too but at least it will give you a starting point to do more research on your own before you make any decisions. Canada is a socialist country at heart, so you are encountering a whole set of  rules and regulations there, that recently, have worsened. Also, as Zaphod said above, some individual Canadian cities are in a bubble.

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                • #9
                  All very good points. I knew about the 15% tax in Vancouver, wondering when or if it would affect the rest of the BC region.

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