Weak US Dollar Creates Opportunity for Canadians
Currencies fluctuate. When the U.S. dollar strengthens, international buyers of American real estate need to spend more of their own currency to purchase a U.S. property. Conversely, when the dollar weakens against other national currencies, foreign buyers have an opportunity to spend less to acquire a property which would have cost more in their nations’ currency at an earlier time. The same logic holds when foreigners sell U.S. properties – a weak dollar can bring a heftier profit.
Recently, the Canadian dollar has strengthened against the U.S. dollar, and this of particular interest to Canadians who own U.S. properties – many of whom own Florida properties.
Today, the Canadian dollar stands at about .74 cents to the U.S. dollar. As recently as March of this year, however, that rate stood at about .68 cents to the U.S. Dollar – the weakest it has been since 2016. In the past month alone the Canadian dollar (commonly known as the Loonie), has gained .04 cents against the Greenback.
According to an influential article in Mondaq, a highly respected content aggregator for the legal, healthcare, and real estate industries, and reprinted in FloridaRealtors.org earlier this month, “More and more Canadians seem to be interested in selling their U.S. real estate to ‘cash in’ on the gains of appreciated property and a stronger currency. But these Canadians need to be aware of potential roadblocks that may slow down potential property sales. Below are some things Canadians should keep in mind when they consider selling their U.S. properties.
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Get an Individual Tax Identification Number: A Canadian without U.S. citizenship, will not have a U.S. social security number. Therefore, a Canadian property owner must obtain an Individual Tax ID number in order to sell a U.S. property. This requires mailing a completed W-7 form to the IRS. This will ensure that the appropriate property taxes are paid upon any property sale. Canadians who sell U.S. property have the same tax obligations as a U.S. citizen.
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State Issues: All states with a state income tax (Florida has none) will require all foreign sellers to file a tax return, even if the sale results in a financial loss, a return is still required.
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Cross-Border Complications: Certain states will not accept notarization of documents by a Canadian notary without “authentication” by a U.S. embassy or consulate. States such as Florida, Arizona, N.Y., and Nevada do accept Canadian notarization without U.S. government authorization.
Regardless a Canadian seller of U.S. property should consult with a cross-border tax advisor before moving forward with a sale of U.S property – not doing so can be expensive.