While Canadians head to the U.S. for bargains on gas and dairy products, many British Columbians are also going south to take advantage of real estate opportunities.
Forty-five minutes below the border at a new development located on Lake Whatcom, all but one of more than 30 cabins is owned by Canadians. As prices start at $269,000 and with the Canadian dollar nearly at par with that of the American, it’s a deal many people see as too good to pass up.
“I think we got great bang for the buck,” Randy Fincham said. “I don’t think we’ve regretted our choice one second along the way.”
Cabin owner Laurie Oseem chose the site because it’s closer than Canadian alternatives.
“We looked in Penticton, we looked in Osoyoos, we looked in Kelowna, and we found great places in all of those spots, but we didn't want to drive four hours,” she said.
British Columbians aren’t the only ones jumping into the U.S. market. In 2011, Canadians spent $9.4 billion on U.S. real estate. Most of them have used equity in Canadian homes to make the purchases.
The influx of cash is one reason why house prices in Phoenix are appreciating faster than anywhere else in America.
According to realtor Diane Olson, home prices in Phoenix are up by 25 per cent since last year.
“I never thought that I would have a business grow so rapidly in such a short period of time,” she said.
Direct flights from British Columbia to Arizona make travel easy, and Olson added that interest remains steady.
“A lot of people are looking that (say), ‘we better do it now before it’s too late.’ I get a lot of calls like that,” she said.
U.S. tax specialist Warren Dueck advises Canadian buyers to consult a tax lawyer before making a purchase. Renters will have to file a U.S. tax return and people who hope to sell for profit should know the capital gains tax is going up.
Dueck warns many Canadians presume tax laws down south are the same as in Canada, but this isn’t the case.
For example, Americans must pay an estate tax, which is a tax at death.
“If someone buys a property for $500,000 and they die the next day, they’re taxed on the net value of that property, even though it hasn’t gone up a dollar,” Dueck said.
“So they’d have a tax liability of potentially $140,000.”
For people looking for recreational properties, Dueck said to consider additional insurances you may need and any costs for property managers.
With a report from CTV British Columbia’s Bhinder Sajan