Can a Canadian Purchase a Home in the United States?

Last Updated: 30 Jul 2024

Canadians can buy U.S. homes, regardless of citizenship status. The U.S. government places no restrictions on foreign nationals purchasing property. For Canadians who want to take advantage of relatively lower home prices for investment or snowbird retreats, buying a home in the U.S. is a good choice.

Whether it's for a winter getaway, an investment property, or a permanent move, the idea of buying a house in the USA is appealing. The process of a Canadian buying property in the USA is straightforward, but it's important to be aware of the legal, financial, and tax implications involved. In this blog, we'll guide you through the essentials of purchasing a home across the border, from understanding the real estate market and financing options to navigating the nuances of property ownership as a Canadian in the USA. With the right information and preparation, buying a house in the USA can be a seamless and rewarding experience.

Reasons Canadians buy property in the US

Vacation homes: A Canadian citizen buying property in the USA is generally looking for a vacation home, especially in warmer climates like Florida, Arizona, and California, to escape cold Canadian winters.

Retirement planning: Some Canadians consider buying a house in the US with the intention of retiring there, attracted by the lifestyle, weather, and lower cost of living in certain areas.

Proximity and accessibility: The relatively close proximity of the US makes it an accessible option for Canadians looking to own property abroad, whether for frequent vacations or longer stays.

Education and family reasons: Canadians with children studying in the U.S. or with family living there may purchase property to have a place to stay during visits or to provide a residence for their loved ones.

Healthcare access: Purchasing property in the US can be for its healthcare facilities and services, particularly in areas known for specialized medical care.

Lifestyle and culture: The diverse cultural and lifestyle options in the U.S. appeal to Canadians looking for a change of pace, whether it's vibrant city life, outdoor activities, or culinary experiences.

Shop around and consider different factors

So, if you’re looking for a vacation retreat or investment in the warmer climes of Florida, Arizona, or California or would like a summer mountain retreat in Colorado, you’ll need to do your homework and consider the following:

US entry and visa regulations for Canadian citizens: Do you need a visa to travel to the US? (Spoiler alert: Not usually.)
Financing and mortgage considerations: Should you use a Canadian or a US Bank?
Property tax liabilities: How much extra cash should you put aside to pay the local real-estate taxes?
Currency exchange rates between US and Canadian dollars: How can you stay on top of volatile currency exchange rates and avoid losing money on the deal? (Second spoiler alert: With a full-service foreign exchange and global payments platform like MTFX.)

Can a Canadian buy a house in the US?

Some Canadians buy a home in the USA so they can move to the US. When it comes to buying a house in the United States, Canadian citizens are in a favourable position as there are no restrictions preventing foreign nationals from purchasing property in America. However, there are a few key legal considerations and requirements that Canadians should be aware of to ensure a smooth process.

1. Legal ownership

Canadian buying houses in the USA can fully own property without needing a local partner or special permissions. This makes the process of buying a house in America relatively straightforward. However, it's crucial to understand the property laws in the state where you plan to buy, as they can vary significantly.

2. Visa and immigration status

As a Canadian buying house in USA, remember that the US does not grant residency or immigration privileges, it is important to understand visa requirements if you plan to spend extended periods in your new home. For visits under six months, Canadians typically do not need a visa for tourism or business purposes. However, if your stay exceeds six months or if you are purchasing property for business purposes, you will need to obtain the appropriate visa. This may involve scheduling an appointment at a U.S. Consulate for visa processing.

3. Tax Identification Number (TIN)

For tax purposes, Canadian citizens purchasing property in the U.S. may need to obtain an Individual Taxpayer Identification Number (ITIN). This number is essential for filing U.S. tax returns and for reporting rental income if you decide to rent out your property.

4. Property title and deed

Ensuring that the property title and deed are clear is crucial when buying a house in the US. It's advisable to work with a qualified real estate attorney or a title company to conduct a title search and resolve any potential issues before completing the purchase.

5. Financing and legal documentation

When you want to buy property in America, be prepared to provide documentation similar to what is required in Canada, such as proof of income, credit history, and personal identification for financing purposes. It's also recommended to familiarize yourself with any additional legal documentation required by the state or local jurisdiction, including disclosures or inspections.

Let’s address each of the above with particulars you need to consider

1. Canadians visiting the US normally don’t need a visa

If you are a Canadian buying property in the USA, you will need to be aware of the visiting requirements. When travelling by air to the US for pleasure, you only need your Canadian passport or NEXUS card. A Nexus Pass is a border crossing ID card that will get you through US customs through a faster-moving processing queue.

If you plan to arrive by sea or by land, you’ll need to show your Canadian passport or an Enhanced Driver’s License/Identification Card, or A NEXUS or FAST/EXPRESS or SENTRI Enrollment Card. For stays longer than six months or if the visit is for reasons other than pleasure, a visa is required. You’ll need to make an appointment online to be processed for a visa at the nearest US Consulate.

2. You can finance your US purchase either with a US or Canadian cross-border mortgage

Financing through an American bank

American banks have rules that are usually different than their counterparts in Canada. An experienced U.S. real estate agent can be most helpful in navigating the paperwork and documentation requirements. Just Google “How a real estate agent can help Canadians buy U.S. property” for a list of informative websites.

Canadian cross-border mortgages

Canadian financial institutions with branches in the U.S.—BMO and RBC, for example—can provide cross-border mortgages for purchasing U.S. property. Those Canadian financial organizations typically require lower down payments and mortgage rates. Also, they are more familiar with Canadian customer needs.  

3. If you own real property, most states will send you an annual real estate property tax bill

If you're a Canadian buying property in USA, keep in mind that every state in the US imposes a real-estate tax on property owners. The tax is based on the assessed value of the property, which is not always the same as the current market value or purchase price.  Expect those assessments to rise every year.

4. Here are some foreign currency exchange considerations you should know about

Property investments are big financial commitments. Canadians will most likely have to make U.S. property purchases in U.S. dollars, and it is important to understand currency exchange advantages.  Even with a Canadian cross-border mortgage, some payments, such as the initial deposit, must be in U.S. dollars.

Canadian buying property in the US: Pros and cons

For many Canadians, the idea of buying property in the U.S. is an attractive prospect, whether for investment, vacation, or future retirement. However, it's important to weigh the benefits and potential drawbacks before making such a significant decision. Here are some key pros and cons to consider:

Pros

Diverse property markets: The U.S. offers a wide range of real estate markets, from sunny beaches in Florida and California to urban settings in New York and Chicago. This diversity allows Canadian buyers to choose properties that match their lifestyle preferences and investment goals.

Investment opportunities: Buying property in the U.S. can be a sound investment. Many U.S. cities have strong rental markets, making it possible to generate rental income. Additionally, the potential for property value appreciation offers long-term financial benefits.

Vacation and lifestyle: For those looking to escape harsh Canadian winters, U.S. properties in warmer climates provide an ideal vacation spot. Owning a home in popular destinations like Florida or Arizona offers the convenience of having a personal retreat without the ongoing expense of rentals.

Favourable exchange rates: At times, the exchange rate between the Canadian dollar and the U.S. dollar can be favourable for Canadian buyers, effectively lowering the cost of purchasing property in the U.S. This can make buying a home more affordable compared to similar properties in Canada.

Cons

Tax implications: Owning property in the U.S. comes with tax responsibilities, including U.S. property taxes and potential capital gains taxes. Additionally, Canadians must report foreign property to the Canada Revenue Agency, which may involve complex tax filings.

Legal and regulatory differences: The legal processes for buying and owning property can differ significantly between Canada and the U.S. Canadians must navigate these differences, including state-specific laws, property insurance requirements, and homeowners' association (HOA) regulations.

Property management challenges: For those who plan to rent out their property or use it as a seasonal home, managing a property from afar can be challenging. This often requires hiring a property management company, which adds to the cost of ownership.

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FAQs

1. How can I purchase a home in the U.S.?

To purchase a home in the U.S., you can start by researching the market and finding a local real estate agent experienced with international buyers. You will need to secure financing, either through a U.S. lender or by paying cash. The process involves making an offer, negotiating the terms, and completing the necessary legal documentation, including a property title transfer.

2. Can I buy a home in the U.S. without leaving Canada?

Yes, you can buy a home in the U.S. without leaving Canada. Many aspects of the buying process, such as property searches, negotiations, and paperwork, can be handled remotely. You can also hire a real estate agent and a lawyer to represent you in the U.S. If necessary, closing documents can often be signed electronically or through a representative.

3. What taxes do I have to pay when buying property in the U.S.?

When buying property in the U.S., you will typically need to pay property transfer taxes, which vary by state and locality. Additionally, you will be responsible for ongoing property taxes based on the assessed value of the property. If you rent out the property, rental income is subject to U.S. federal income tax, and potentially state income taxes.

4. Do I need a visa to buy property in the U.S.?

No, you do not need a visa to buy property in the U.S. Ownership of property does not confer residency rights, and you can own property without any special immigration status. However, if you plan to spend extended periods in the U.S. (typically over six months), you may need to obtain an appropriate visa.

5. Can I buy a house in America if I live in Canada?

Yes, as a Canadian living in Canada, you can buy a house in America. There are no restrictions on foreign nationals owning property in the U.S. However, you should consider the legal, financial, and tax implications of owning property abroad.