Now might be the right time for Canadians looking for a warm-weather (and economic) hideaway in Florida to act -- despite the struggling Canadian economy.
A recent report from TD Bank economists projects the Canadian dollar will hit a bottom of slightly more than 71 cents U.S. in the first quarter of 2016. The report underlines a softening in the Canadian economy that has been buffeted by declining oil prices.
To be sure, some signs over the latter part of 2015 were positive. Consumer spending increased slightly, including for durable goods and automobiles.
Yet GDP growth was sluggish and unemployment rose 0.5 percentage points to 7.1% from January through November of 2015. The economy lost nearly 36,000 full-time jobs alone in November. Before the situation worsens, it may be time for wealthier Canadian investors to consider purchasing a Florida property. Florida recently has risen to meet the demand, with new ultra-luxurious properties like The Bristol under construction to accommodate the rising need for new Florida-based properties.
Yet even as The Bristol's Penthouse units continue to rapidly sell, there are new tax laws on purchases that everyone should be aware of. It's important to consult a specialist or someone with strong knowledge of international tax laws before making an investment.
Canadians are already Florida's top international purchasers of real estate, making up more than 30% of all foreign home sales. Loyal snowbirds inject close to half a billion dollars annually into the economy through property taxes.
Snowbirds must answer a Substantial Presence Test, an IRS formula to determine if someone has become a U.S. tax resident. The Substantial Presence Test requires that someone is in the United States for at least 31 days during the current year and that he or she has been in the U.S. a total of 183 days over the current year and two previous years.
The U.S. and Canadian government have forged an agreement in which the countries are now scanning passports and tracking the length of visits.
This article is commentary by an independent contributor.