Buying a condo in Florida

add filing US taxes and estate planning to your points of interest.

flash67 wrote: ↑
Looking to hear from anyone that has any experience with being a Canadian citizen and purchasing a condo as a vacation getaway in Florida and rents it out when not in use.

Which part of Florida are you looking at? If you're looking for a vacation property to rent out, I would recommend looking at getting a minimum 3bed 2 bath single family home preferably with a covered pool/spa and a lanai as you would not have to compete with the thousands of all suite hotels as well as time shares. Also, make sure whatever you're purchasing is zone for short term rentals. Not all properties allows for short term rentals in Florida.

flash67 wrote: ↑ Talk about CAD credit, US credit, mortgages, loans, down payments for canadians vs americans... Insurances, hurricane insurances, etc..

For financing on a vacation home, you can try RBC.
http://www.rbcbank.com/cross-border/us-mortgages.html

If you're buying a condo in the inland area, insurance ranges from $350-$700/year depending on the age of your property, construction material used, and coverage that is provided by your HOA.

flash67 wrote: ↑ I wanna hear horror stories, good things, everything you guys can share.. anything I should be warned about, etc etc.. hidden fees, buying in US or CAD... anything...

I just Google this up, take a look, it provides a pretty good summary.
http://blog.myvr.com/2013/05/30/orlando ... gulations/

William W wrote: ↑ Which part of Florida are you looking at? If you're looking for a vacation property to rent out, I would recommend looking at getting a minimum 3bed 2 bath single family home preferably with a covered pool/spa and a lanai as you would not have to compete with the thousands of all suite hotels as well as time shares. Also, make sure whatever you're purchasing is zone for short term rentals. Not all properties allows for short term rentals in Florida.


For financing on a vacation home, you can try RBC.
http://www.rbcbank.com/cross-border/us-mortgages.html

If you're buying a condo in the inland area, insurance ranges from $350-$700/year depending on the age of your property, construction material used, and coverage that is provided by your HOA.


I just Google this up, take a look, it provides a pretty good summary.
http://blog.myvr.com/2013/05/30/orlando ... gulations/

Looking in the Daytona beach area... Preferably a condo rather than a beach HOUSE. We like the idea of the amenities the condos offer.

In Daytona beach however, it's more likely you'll have someone rent a condo then a beach house that isn't on the beach.

flash67 wrote: ↑ Looking in the Daytona beach area... Preferably a condo rather than a beach HOUSE. We like the idea of the amenities the condos offer.

In Daytona beach however, it's more likely you'll have someone rent a condo then a beach house that isn't on the beach.

It doesn't look like Daytona Beach has a very active section there. But have you checked out this site?
https://www.trulia.com/voices/Daytona_Beach---11482/

Once I was able to sieve out the sales pitch, I found it helps me a bit in riding down the learning curve in understanding the local market there.

I'm currently in the West Palm Beach area of South Florida.

TD Bank is great because they can pull your Canadian credit history. However due to builder incentives we had to go with their preferred lender.
I am here temporarily but did buy a house in 2016, it was a horrible process dealing with US banks, nothing is organized down here as it is in Canada, I was ready to move back due to all the craziness. People down here have a reputation for not being the brightest and it shows in business, they take no responsibility and blame someone else. You ask them to check and make sure they have everything and they say yes yes yes, you book movers and plan, then a day before closing they come back and told us they need X, Y , Z updated documentation, like really? They had 2 months to ask for it. Because of that my closing was delayed and I was furious. Good thing I didn't actually book movers or anything, but it would have been nice to get my place on the friday like we decided, versus the following Wednesday. Worse and most stressful few weeks of my life down here, bought several houses in Canada and never had anything close to that experience.

With condos watch out for condo fees , some can be high. Also make sure you read all the condo rules, most don't allow airbnb type rentals, so you'll have to do it on the DL and hope you don't get caught like some do or risk getting in trouble and dealing with the condo board.

Hint: Old people down here have nothing better to do, they watch your every move, they know when you didn't go to work, or when you are away. They will complain to the board over any little thing they can, they have nothing better to do all day.

Whatever date you think you'll close, plan for delays, apparently it's a common thing down here.

Goodluck!
I thought of starting a business to help Canadians manage their rental properties but it seems like it could be a PITA and I haven't bothered yet.

You should also consider the cost of renting a place during the winter months vs buying.
Run the numbers. Your lost earning potential with that money tied up in the condo, taxes and maintenance fees for a year for a few months getaway.

And if you're looking to rent i think this strategy might be best:
Go on Trulia and look for furnished rentals.
Start messaging owners on December 23rd looking for a January occupancy.
Even if they are looking for a 1 year tenant someone is going to bite because they sure as heck won't be finding one the last week of December.
This might get you resident rates vs vacation rental rates.

you're also not tied to going back to the same place every year.

We purchased a co-op right across from the beach in Naples Florida when the CAD was at par with the US. The purchase was not an issue as we sent the funds from Canada. We opened an account with PNC Bank. PNC had just taken over the RBC US accounts so there was no problem with the banking as they were familiar with dealing with Canadians.
We gutted and renovated the unit at a fraction of the amount we would have spent in Canada; everything was done by permit, we received an occupancy certificate and furnished the unit. So far so good......

Renting: Watch out for the Home Owners Association rules (HOA). Our HOA only allowed a maximum of 3 renters per year. Each rental had to be for a term between 2-6 months. In one year we rented the unit for 9 months but normally renters are only interested in renting from Dec - April with Feb and March being the peak months. If you plan to use the property during our Canadian winter months you will lose out on the prime rental months. From May to December the market for rentals was non existent.
Property Managers - charge approx 20% in commission and add on fees to check and replace inventory etc. We had renters contacting us to complain that the apartment was not cleaned properly as there was no supervision by the property managers
Insurance - the CO-OP fees covered hurricane insurance but I had to buy liability and content insurance
HOA fees - ours was a well run HOA with a very good reserve fund so the YoY increases were inline with inflation. It was approx $11K USD per year which is a lot of money if you use the property for only a few months in the year.
HOA - Many of the residents were owners and they do not like renters. We heard comments such as this is our home and we don't want strangers moving in next door etc. etc. Our renters loved the complex so fortunately they did not face any issues.
Compatibility - We purchased with the intention of using it in retirement. Should have researched our compatibility better; just assumed that we would fit in and be accepted (hint.....Naples is not multicultural like Toronto)
Selling: - We were able sell our unit last year using the agent we bought the property with. They have different types of offer/sale documents so make sure you understand what you are agreeing too. For example depending on the value of your property and other factors you may or may not be subject to witholding taxes of 15% of the sale price of the property. You are responsible for all costs related to the remittance of the with holding taxes even though it is the legal responsibility of the buyer. This can add on at least $1000/- USD if not more to your selling costs. In my case I spent 6 months working with the IRS on a mistake made on how much witholding tax was required. I then spent 2 months getting the escrow agent to release the excess funds to us.
Closing: It is common to use title agents instead of lawyers. If a title agent is used the buyer normally chooses the agent (at least that is what we were told)
TAXES: You will need to apply for an ITIN and file US taxes annually. In our case the property manager was responsible for remitting the retail sales taxes. You file taxes in both Canada and the US

If you are purchasing near the ocean do your research. The ocean levels are rising and it is possible that properties near the ocean will be flooded in 20 years or so. Areas like Miami are already having flooding issues. This may not be top of mind today but will impact selling prices in the future

Bottom Line....we did ok financially from the deal even after paying capital gains and taxes on the foreign exchange gain. Would I do it again.....NO! It would be less stressful to rent than to own.

Hope this helps.

kartor wrote: ↑ We purchased a co-op right across from the beach in Naples Florida when the CAD was at par with the US. The purchase was not an issue as we sent the funds from Canada. We opened an account with PNC Bank. PNC had just taken over the RBC US accounts so there was no problem with the banking as they were familiar with dealing with Canadians.
We gutted and renovated the unit at a fraction of the amount we would have spent in Canada; everything was done by permit, we received an occupancy certificate and furnished the unit. So far so good......

Renting: Watch out for the Home Owners Association rules (HOA). Our HOA only allowed a maximum of 3 renters per year. Each rental had to be for a term between 2-6 months. In one year we rented the unit for 9 months but normally renters are only interested in renting from Dec - April with Feb and March being the peak months. If you plan to use the property during our Canadian winter months you will lose out on the prime rental months. From May to December the market for rentals was non existent.
Property Managers - charge approx 20% in commission and add on fees to check and replace inventory etc. We had renters contacting us to complain that the apartment was not cleaned properly as there was no supervision by the property managers
Insurance - the CO-OP fees covered hurricane insurance but I had to buy liability and content insurance
HOA fees - ours was a well run HOA with a very good reserve fund so the YoY increases were inline with inflation. It was approx $11K USD per year which is a lot of money if you use the property for only a few months in the year.
HOA - Many of the residents were owners and they do not like renters. We heard comments such as this is our home and we don't want strangers moving in next door etc. etc. Our renters loved the complex so fortunately they did not face any issues.
Compatibility - We purchased with the intention of using it in retirement. Should have researched our compatibility better; just assumed that we would fit in and be accepted (hint.....Naples is not multicultural like Toronto)
Selling: - We were able sell our unit last year using the agent we bought the property with. They have different types of offer/sale documents so make sure you understand what you are agreeing too. For example depending on the value of your property and other factors you may or may not be subject to witholding taxes of 15% of the sale price of the property. You are responsible for all costs related to the remittance of the with holding taxes even though it is the legal responsibility of the buyer. This can add on at least $1000/- USD if not more to your selling costs. In my case I spent 6 months working with the IRS on a mistake made on how much witholding tax was required. I then spent 2 months getting the escrow agent to release the excess funds to us.
Closing: It is common to use title agents instead of lawyers. If a title agent is used the buyer normally chooses the agent (at least that is what we were told)
TAXES: You will need to apply for an ITIN and file US taxes annually. In our case the property manager was responsible for remitting the retail sales taxes. You file taxes in both Canada and the US

If you are purchasing near the ocean do your research. The ocean levels are rising and it is possible that properties near the ocean will be flooded in 20 years or so. Areas like Miami are already having flooding issues. This may not be top of mind today but will impact selling prices in the future

Bottom Line....we did ok financially from the deal even after paying capital gains and taxes on the foreign exchange gain. Would I do it again.....NO! It would be less stressful to rent than to own.

Hope this helps.

Not being able to rent it during the off months and the HOA fees of $11K a year makes renting definitely sound like the better option for escaping canadian winters.
Thank you for your post.

A clarification....the $11K is HOA fees + Insurance+ Property taxes. I agree with cdndeal that renting is very attractive especially as managing the property long distance was a real hassle.

kartor wrote: ↑ A clarification....the $11K is HOA fees + Insurance+ Property taxes. I agree with cdndeal that renting is very attractive especially as managing the property long distance was a real hassle.

I manage rental properties that are a 30 minute drive from my house with numerous hardware stores along the way.
Still a hassle lol.

IMO, the biggest hurdle for a Canadian buying RE in Florida is financing. For a house, I've been told the minimum downpayment is about 30-40%. For condo's they typically want at least 50% downpayment.

Taxes are aren't really that big of a deal. You can simply pay a flat 30% of gross rental as a foreign owner and that's it. Having said that, it's usually beneficial to actually file US returns on the rental income rather than pay the 30% since you can't deduct any business expenses with the flat 30%. Filing the rental income in the US is certainly more of a hassle but it's really not that big of a deal if that's your only source of income in the US. In either case, you will get a foreign tax credit so you won't repay the taxes in Canada.

Estate tax is another consideration but that's really only a factor if your worlwide assets at time of death exceed $5.5mil (sadly, probably not a problem for anyone reading this message).

kartor wrote: ↑ If you are purchasing near the ocean do your research. The ocean levels are rising and it is possible that properties near the ocean will be flooded in 20 years or so. Areas like Miami are already having flooding issues. This may not be top of mind today but will impact selling prices in the future

Hope this helps.

Your information was great, thank you very much.

We've done a lot of research in the last couple days and honestly the biggest worry is the flooding. This is honestly one of the biggest impacts about buying something down there.

However do you know anything about insurance regarding this? Let's say, we buy a condo.. and in 30 years, the building and entire coast line is permanently uninhabitable, do we get anything back from that? I'm curious how this works or it's just like, well you snooze you loose situation.

Does anyone know anything regarding this?

About a condo being permanently uninhabitable?

flash67 wrote: ↑ Your information was great, thank you very much.

We've done a lot of research in the last couple days and honestly the biggest worry is the flooding. This is honestly one of the biggest impacts about buying something down there.

However do you know anything about insurance regarding this? Let's say, we buy a condo.. and in 30 years, the building and entire coast line is permanently uninhabitable, do we get anything back from that? I'm curious how this works or it's just like, well you snooze you loose situation.

Sorry I don't know anything about how to insure against flooding due to the sea levels rising.
Why not call an insurance agent in the area you are interested in buying a property and ask? I do recall that being non resident there were limitations to the coverage I qualified for.
I found an interesting article .........
https://www.bloomberg.com/news/features ... homeowners

One thing about insurance is that if there was ever a catastrophic and FEMA gave some money, as a foreign owner I don't believe you qualify for FEMA funds so you probably need to make sure you are covered for that.

flash67 wrote: ↑ Does anyone know anything regarding this?

About a condo being permanently uninhabitable?

For most condos, the building itself is insured by the HOA you pay monthly to. In most cases, you're only insuring for items inside the frame of the buildings itself. Therefore, you will have to ask the HOA and find out the insurance coverage of the community you're interested in as it can differs between communities.

We are thinking of getting a condo in Florida.

Lots of our friends and a couple relatives are already there. The thing is many people are even buying houses so maybe that is a good opportunity?

McGinnyhot wrote: ↑ We are thinking of getting a condo in Florida.

Lots of our friends and a couple relatives are already there. The thing is many people are even buying houses so maybe that is a good opportunity?

If many people are buying, then the market will be a bit inflated.. Majority of people are also really stupid.