Buying U.S. Property As A Canadian

Buying U.S. Property As A Canadian

If you've been dreaming of your very own sun-soaked home in the U.S., you're not alone. The American real estate market has long been a beacon for Canadian homeowners, luring them south with promises of sandy beaches, snow-free winters, and plenty of investment opportunities. Whether you're looking to build a winter getaway, invest in rental property, or migrate permanently, buying property in the U.S. as a Canadian is more than an achievable dream—it's a sound decision. But how do you get started? Continue reading as we break down the details of this exciting venture. 

  • Understanding Ownership Rules: Debunk common myths and clarify what properties Canadians are allowed to own.
  • Getting Prepared: Learn about the crucial steps before making the big purchase.
  • Financing and Mortgage Differences: Uncover the key differences between Canadian and U.S. mortgages, and what payment options are available to you.

Remember, careful preparation and knowledge of handling the process will ease your journey in finding your dream U.S. real estate investment.

Can Canadians Buy Property In The U.S.?

Undoubtedly, Canadians absolutely can own property in the United States. It's an option that many are keen to explore, especially those who enjoy vacationing in warmer U.S. states during the winter or are looking into an investment opportunity. There's no citizenship or residence requirement for owning real estate in the U.S. However, this doesn't mean the process is without its complexities. 

But first, if you want financing for your next investment in Canada or the U.S. and want to know what options are available, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.

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Canadian buyers will need to navigate the U.S. real estate system, which can be quite different from what they're used to at home, including the lengthy and challenging financial preparations that such a purchase entails. Furthermore, international investors must be aware of the financial and tax implications their purchase may lead to, both in the United States and Canada. 

Looking into the experiences of Canadian citizens as cross-border investors can be enlightening and give you an idea of what to expect. According to a recent survey, 55% of foreign investors reported their allocations to U.S. commercial real estate met or exceeded their expectations, indicating that with the right strategy and understanding of local market conditions, buying U.S. property can be a rewarding venture. 

In 2022, a shift was seen in the market dynamics with foreign investors becoming net sellers of U.S. real estate, selling more than they acquired. This is not necessarily a deterrent. It could be a strategic move by large investors, who typically hold on to their real estate for ten years or more to reap the most significant rewards. Therefore, as a Canadian planning to invest in the U.S., you also should consider a long-term investment approach.

Preparing Yourself to Purchase Property in the US

As a savvy Canadian investor, you're in good company. With a staggering 55% of global investors meeting or exceeding their U.S. commercial property investment goals, the U.S. market can be a profitable playground. Knowing how to prepare is the key to a smooth transaction, and we're here to guide you down this exciting path. 

Just as a local investor needs to understand the dynamics of their region, you'll need to learn the intricacies of investing in the U.S. market. Do you want to live on the property, use it as a vacation home, or gain rental income from it? Maybe a mix of these? Answering these questions will give you a clear path as you move forward. 

Engage a real estate expert who specializes in U.S. immigration and property investment strategy to ensure you make informed decisions. And remember, much like owning a home in Canada, owning property in the U.S. involves additional costs such as insurance, property taxes, and maintenance expenses. Always factor these into your budget. 


Purchasing U.S. Property as A Resident Vs. Non-Resident 

If you're a Canadian resident living in the U.S., purchasing property might be a straightforward process. As a non-resident, some differences might require additional planning and support. For example, securing a mortgage might be more challenging due to documentation and financial history requirements typical for international applicants. Rest assured, however, that being aware of these distinctions at the start is half the battle won.

Setting Up A U.S. Entity

Setting up a U.S. entity can serve as a strategic avenue to owning property in the United States as a Canadian. This approach can aid in streamlining administrative aspects and potentially offer tax advantages. Before proceeding, it's crucial that you consult a professional with expertise in cross-border business strategies and real estate investment. 

However, it's worth noting that setting up a U.S. entity isn't a simple task, and rushing through the process can possibly lead to legal and financial risks down the line. There are various types of entities you can establish, such as Limited Liability Companies (LLCs), Corporations, and Limited Partnerships, each with its pros and cons, and regulatory requirements. 

Understanding Different Types of U.S. Entities 

Limited Liability Companies (LLCs)

LLCs are favoured by many foreign investors for the protection they offer. By owning U.S. property through an LLC, your risk is limited to the investment in the company. However, the tax implications are complex and may not always be favourable. 


Foreign investors also commonly set up corporations. These business structures have the potential for more tax benefits but come with higher administrative requirements. 

Limited Partnerships

Limited partnerships allow for the active participation of Canadians in U.S. property investments. This collaboration can provide access to more extensive opportunities and potential financial gains. But, it does require a high level of trust, as without proper management, the risks are also considerable. 

The Process of Setting up a U.S. Entity 

Once you've decided on the type of entity you'd like to establish based upon your investment goals and personal circumstances, you can start the process. This will typically entail selecting a suitable state for the entity, preparing and filing required documentation with the State Department, obtaining an Employee Identification Number (EIN) and setting up a U.S. bank account. Expeditious and efficient, this process, however, requires diligence and utmost attention to detail. 

No matter the route you choose, always remember that the context of buying U.S. property as a Canadian is delicate. Therefore, it is highly advisable to seek professional advice in all your cross-border investment endeavours.

What Are The Differences Between US And Canadian Mortgages

When diving deep into the realm of purchasing U.S. property as a Canadian, understanding the differences between U.S. and Canadian mortgages is of utmost importance. Both nations have specialized systems customized to their respective markets, and as a buyer, your awareness of these differences can empower you to make savvier choices. 

Understanding U.S. Mortgages 

U.S. mortgages are known for their flexibility in rates, terms, and amortization schedules. Mortgages can be either fixed-rate, with the interest rate remaining unchanged during the life of the mortgage, or adjustable, with interest rates that fluctuate according to market trends. Amortization periods typically range from 15 to 30 years, with options for early repayment. However, keep in mind that prepayment could involve penalties. 

In the U.S. The amortization is the same as the term. For example, if you get a 30-year mortgage, the term is for the full 30 years.

A Closer Look at Canadian Mortgages 

On the other hand, Canadian mortgages are characterized by stricter regulations. The two common types are variable-rate and fixed-rate. With a variable-rate, interest fluctuates in line with the prime rate, which can lead to unpredictable monthly instalments. A fixed rate secures a consistent payment for a set time, typically five years. After this term is up, the mortgage is renewed at the current market rate. The standard amortization period in Canada is 25 years, but early repayment is typically penalty-free. 

Navigating Cross-Border Mortgages 

Deciding between a U.S. or Canadian mortgage when purchasing U.S. property can prove to be a challenge, particularly as a non-resident. Cross-border investors, however, have seen an increasing exposure to income stability when considering international mortgages as a possible route. Factors such as a lower interest rate in one country, the potential for increased property value, and the diversification benefits of owning international real estate all play crucial roles in the decision process. 

Financing Your Purchase: Exploring Mortgage and Payment Options 

When it comes to financing your U.S. property purchase as a Canadian, you have several options: 

  • U.S. Mortgages: A popular choice is to procure a mortgage through a U.S. Lender like LendCity Mortgages. Bear in mind that as a Canadian, you may be required to put down a larger down payment than local borrowers, and rates may slightly differ.
  • Canadian Mortgages: Some Canadian banks offer U.S. mortgages for Canadian citizens. This can be a suitable option if you wish to keep all your banking and financial transactions within Canada.
  • Home Equity Line Of Credit (HELOC): This allows you to borrow against the equity in your existing home in Canada. This could be a viable option if you wish to keep your mortgage activity within Canada.
  • Cash Payments: If you have the cash available, it may be simplest to buy the U.S. property outright, thereby avoiding mortgage complexities altogether.

Identifying the right financing option involves a careful analysis of your immediate financial situation, long-term financial plans, and an understanding of both the U.S. and Canadian mortgage landscapes.

LendCity Mortgages has many options for investors in Canada and the U.S. Book a FREE Strategy call below.

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Frequently Asked Questions About Buying U.S. Property As A Canadian

Is now a good time to buy real estate?

Yes, it certainly can be considered a good time to buy real estate as an international investor, especially in the United States. Many large investors are putting their resources into the US real estate market on a notable scale, reflecting the strong investment potential. The main driving factors behind this can be attributed to the versatility in property type, ranging from residential properties to logistic real estates and the stability of the market, that continues to produce attractive returns. Market dynamics and ongoing trends further highlight that properties tend to yield their greatest rewards when held for an extended period, optimally ten years or more, providing a long-haul economic advantage. In terms of property selection, taking a targeted approach by considering single level properties for baby boomers or well-located apartments for young professionals can provide you with high-quality tenants and potentially higher returns.

What are the legal requirements for Canadians buying property in the USA?

For Canadians looking to buy property in the U.S., the good news is that there are no specific legal restrictions on ownership. However, there are essential legal considerations to keep in mind during the purchasing process. 
Firstly, it is critical to understand the requirements and implications related to financing and taxes. When buying U.S. property, you'll be required to file an annual U.S. income tax return and a Canadian tax return. This includes reporting rental income from your U.S. property, even if you have no U.S. tax liability. 
Secondly, if you plan to rent out your property, you must obtain a U.S. Individual Taxpayer Identification Number (ITIN). This number is required by the Internal Revenue Service (IRS) to file a U.S. tax return. An ITIN is required if you are buying in your personal name. Most lenders want you to purchase using an Entity. If you purchase in an entity, you will need an EIN Number.
Additionally, owning U.S. property might subject you to U.S. estate tax in case of your demise. It is highly recommended to seek advice from a tax and legal professional well-versed in both U.S. and Canadian property law to navigate these complexities. 
Lastly, while Canadians don't need a visa just to buy or own U.S. property, visa requirements come into play if you plan to live in your U.S. property for extended periods. Under U.S. immigration law, Canadians can typically stay in the U.S. for up to six months per year without a visa. If you intend to stay longer, you'll need to apply for an appropriate visa. You should consult an immigration attorney for guidance in navigating U.S. immigration law. 

Do Canadians require a visa to buy property in the USA?

Interestingly, Canadians do not require a visa to buy property in the U.S. From a real estate perspective, there's no legal limitation for foreigners, including Canadians, to own property. However, living in the U.S. full-time as a property owner would require a proper visa or immigration status.

What are the tax implications for Canadians buying property in the USA?

As a Canadian buying property in the U.S., it's essential to understand the potential tax implications. When purchasing a residential property, the U.S. does apply taxes at three different levels: federal, state, and local. This could involve income taxes if you rent out the property, property taxes, and potentially capital gains tax when you sell. A Tax Treaty exists between Canada and the U.S. to prevent double taxation, meaning you won't pay tax in both countries. However, tax laws can be complex, and it's beneficial to consult a tax professional familiar with U.S. and Canadian laws to understand your specific tax obligations.

Is real estate better than stocks?

The competition between real estate and stocks isn't clear-cut. Both have their own sets of advantages and are pivotal components in building a diversified portfolio. Real estate continues to attract investors due to its tangible nature, potential for steady cash inflow, and benefits related to tax deductions and capital appreciation. 
Stocks, on the other hand, offer flexibility, liquidity, and the potential for high returns. They are also far less management-intensive compared to real estate. It's possible to hold a diversified portfolio of stocks without requiring property upkeep. This makes them more manageable for many investors. 
Your decision depends on your financial goals, risk tolerance, time horizon, and personal interest. In general, history has shown that a well-diversified portfolio that includes both real estate and stocks tends to provide a balance of growth and income over the long term.

What is a Foreign National?

A foreign national is an individual who is not a citizen of the country in which they are living or investing. This person may reside temporarily or permanently, may hold a work visa, or may be classified as an immigrant or non-immigrant. When it comes to the property market, a foreign national typically refers to someone engaging in cross-border investment, seeking opportunities in international real estate markets outside their own country. In this case, a Canadian buying property in the U.S. would be considered a foreign national.

What are the top locations that Canadians buy property in the U.S.?

When looking at purchasing property in the U.S., Canadians favour areas that offer high investment potential or cater to their lifestyle preferences. New York City and Washington, D.C. are two major real estate markets that have attracted a significant number of Canadian buyers, thanks to their robust economic landscapes and vibrant urban culture. Moreover, a notable proportion of Canadians are also investing in multifamily properties in diverse states such as Colorado, Florida, Illinois, Indiana, and Texas. These states provide lucrative opportunities owing to their growing demand for such property types. While decisions vary depending on individual circumstances and preferences, these are the key markets where Canadian investors have been actively securing U.S. properties.

If you are ready to start investing today and want more information about how to best structure your portfolio – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.

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