Canadians love Scottsdale and we love Canadians:) If you are moving from Canada to Scottsdale, be sure to check out my second home primer.
Okay, let’s get the legal stuff out of the way.
I am not an attorney or accountant. Buying a home in the United States means that when you sell, there may be tax ramifications (FIRPTA)–be sure to consult with a tax planning professional before you buy. If you need a recommendation, let me know.
Alright–on to the real estate.
Over the years I have served many Canadian buyers–some of whom bought and sold more than one property here in Scottsdale and elsewhere around the county. Aside from the tax consequences of selling a home in the states, Canadians who wish to finance a property, should consult with a qualified lender. Working with a title company that is well-versed in dealing with foreign investors is also important.
Listed below are excellent lending and title company contacts who can assist with your Scottsdale, Arizona purchase or sale.
- Brian Yampolsky, Orion Mortgage 602.912.0222 [email protected]
- Sean Wohland, Mortgage Possible 480.748.998 [email protected]
- Deanna Lee, Chicago Title 602.667.1000 [email protected]
Foreign Home Buyer Considerations
I’ve consulted with lending and title company professionals to create a list of considerations for foreign home buyers. Here are some items to be aware of as you navigate a purchase or sale of real estate in Scottsdale, Arizona.
Let’s talk about FIRPTA or the Foreign Investment in Real Property Tax Act.
When non-resident aliens or foreign entities sell property in the U.S., they are governed by FIRPTA. Here are some steps to consider when preparing to sell a home in Scottsdale.
- If the gain on the sale will be greater than 10%, title companies recommend that the seller consult a CPA or tax attorney regarding IRS form 8288B for a Withholding Certificate.
- The seller should carefully review the FIRPTA Withholding Agreement–all parties must sign this agreement including the seller’s tax professional.
- If the buyer of a foreign sellers home plans to use the home at least 50% of the year and the sales price does not exceed $300,000,a Buyer’s Declaration for $300,000 Residence Exception form can be completed.
- If the buyer does not plan to use the home at least 50% of the year and/or the sales price exceeds $300,00, the buyer (through the title company) will request 10-15% withholding pending receipt of the Withholding Certificate.
The above information has been provided by a title company and the buyer/seller must complete their own due diligence by visiting the IRS. gov website or by consulting with the appropriate tax planning professional.
Foreign home buyer lending considerations
When moving from Canada to Scottsdale, home loan financing might be needed–here are some lending considerations.
Do you have a work visa which allows you to earn money in the U.S.? Do you have a history of credit and/or income in the U.S.? If the answer to the above is no, most traditional lenders will be unable to help. Not to worry though–there are other options.
One U.S. bank which might be able to help is BMO Harris–another option for cross-border lending is RBC Bank. If you need financing in order to purchase your Scottsdale property, having a loan pre-qualification form is critical and it’s a requirement of our Residential Purchase Contract.
Buying in Scottsdale versus Canada
Full disclosure–I have never purchased a home in Canada, but I can only imagine that there are some differences in our market. For starters, there is the paperwork. To get an idea of the steps involved, you can visit my Home Buyer Insight page located on my company website–on this page you can also view copies of our contract and other documents used in an Arizona home purchase.
Another good resource is my Scottsdale Real Estate Guide–this is a great place to start if you’re thinking of buying a property in Scottsdale. Buying a home outside your own country can feel like a daunting proposition, but with the right real estate partner on your side, it will be a breeze! I hope you found “From Canada to Scottsdale | Second Home Primer” to be of value. If you have questions about buying or selling a Scottsdale home, please contact me any time.