Keeping US Real Estate – Does it make sense?
On September 30th, 2007, the Canadian dollar reached parity with the US dollar for the first time in close to 31 years. What ensued was a rush by Canadians to purchase winter homes in the sun-belt states, primarily Florida, Arizona, and California, in an attempt to escape the cold, dark winters north of the 49th.
The strong dollar and the collapse of the real estate market due to the financial crisis in 2008 meant that many Canadians purchased their vacation homes at bargain prices, and are now sitting on healthy unrealized profits.
Fast forward a dozen years, and the question I'm asked most often lately is, "given current events, does it still make sense for me to continue to hold onto my US property, or should I look at other options?”
These days, real estate prices in Arizona are now approaching all-time new highs and, with the Canadian dollar presently valued at 80 cents, a good many Canadians are asking: Is it time to sell, and realize an additional 20% plus profit when I repatriate the proceeds back to Canadian dollars?
The short answer is, that depends. Every individual situation is going to be inherently unique when personal health, age, family dynamics, and finances are considered. Travel has recently become more complicated, and I suspect the cost of health insurance to maintain that snowbird lifestyle isn't likely to go down anytime soon. All of this (and more) needs to be taken into consideration.
As someone who has lived the snowbird lifestyle for many years, whenever I check the January weather back home on the Canadian Prairies, and read that the 10-day weather forecast is calling for highs of minus 30, my sunbelt investment looks like one of my best! Many self-made high net worth individuals note there are other considerations in addition to taxes & profits that must be examined prior to making major financial decisions, and I whole-heartedly agree.
That is why we insist on investing the time to get to know what matters most to you so we can understand your big picture. Only then do we begin to offer personalized, thoughtful advice and counsel.
Does it (still) make sense to own US real estate? It might - Give us a shout, we'll put the coffee pot on and help you work through that question and others.
Either way, the coffee is on us.
Joseph Dawson, CFP®
Financial Advisor
Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Joseph Dawson, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member - Canadian Investor Protection Fund. Raymond James (USA) Ltd., member FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.
