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Old 03-12-2010, 10:22 AM   #41
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Kroeran-How did you deal with the potential Florida estate/probate tax issues for non residents?
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Old 03-12-2010, 11:27 AM   #42
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... And in the time you are there, are you really only a transient and can you ever live more like a local?

So owning, setting the place up the way we like it and becoming part of the community sounds better to me. I know that's the expensive route....
How should we define “live more like a local”?

Some celebrities with gobs of money have multiple homes in several cities and out in the country, it’s hard to imagine. Reminds me of the scene in the movie, “The Queen” where QE2 visits the neighbor’s house to see the magnificent animal they shot; just making a casual call.

My grandparents built a summer home on a lake in the ‘20s; there is a lot of continuity for six generations of knowing the neighbors who were part or full-time residents. I spent a couple of days there four years ago and ran into a familiar neighbor who has grown old and eccentric. My cousins winterized the place and stay full-time and are genuine members of the community, helped set up a nature observatory, etc.
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Old 03-12-2010, 07:07 PM   #43
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Kroeran-How did you deal with the potential Florida estate/probate tax issues for non residents?
I eat lots of vegetables

the tax laws on this are so wonky and changeable right know, hard to know what to do. I would be more concerned if I was older and there was a lot of capital gains built up....or if I had kids. Wife is covered by me being over insured in the event of an unplanned death.

you also have to be more concerned the higher the absolute value and the higher the proportion of your world estate I believe.

I must confess I don't have a total handle on this. Maybe another reason to be an annual leaseholder rather than an owner of these things...unless it is a place you are parking money in an asset you use.
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Old 03-13-2010, 09:15 AM   #44
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I have done a bit of research on this. On death you may be liable for estate taxes (up to 45%) on the value of your Florida property (not capital gain) if certain size tests are met. Ways around this relate to putting a mortgage on the property (like everyone else down there). Quite complicated-suggest you look into it more.
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Old 03-13-2010, 10:09 AM   #45
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I have done a bit of research on this. On death you may be liable for estate taxes (up to 45%) on the value of your Florida property (not capital gain) if certain size tests are met. Ways around this relate to putting a mortgage on the property (like everyone else down there). Quite complicated-suggest you look into it more.
Ewww, that sucks! Scratch that potential investment off my list......
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Old 03-13-2010, 02:21 PM   #46
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I have done a bit of research on this. On death you may be liable for estate taxes (up to 45%) on the value of your Florida property (not capital gain) if certain size tests are met. Ways around this relate to putting a mortgage on the property (like everyone else down there). Quite complicated-suggest you look into it more.
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Ewww, that sucks! Scratch that potential investment off my list......
Estate taxes begin at $3.5M don't they? Aren't they the same everywhere?
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Old 03-13-2010, 03:05 PM   #47
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Estate taxes begin at $3.5M don't they? Aren't they the same everywhere?
They did: Estate tax in the United States - Wikipedia, the free encyclopedia
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For a person dying during 2006, 2007, or 2008, the "applicable exclusion amount" is $2,000,000, so if the sum of the taxable estate plus the "adjusted taxable gifts" made during lifetime equals $2,000,000 or less, there is no federal estate tax to pay. According to the Economic Growth and Tax Relief Reconciliation Act of 2001, the applicable exclusion will increase to $3,500,000 in 2009, the estate tax is repealed in 2010, but then the act "sunsets" in 2011 and the estate tax reappears with an applicable exclusion amount of only $1,000,000 (unless Congress acts before then).
The issue is quite complex and any interested Canucks can find some information here. As I read it, a Canadian with a $4Million NW and a $500K house in the US would pay 45% of $500K, unless (s)he is clever enough to die in 2010.Since my NW is above the 2011 limit by quite a bit, I won't own any US assets after 2010, much as I would like to.
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Old 03-18-2010, 11:35 AM   #48
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Kunquat has a good handle on this. I ,like him, will not own US real estate for these reasons. There are ways to reduce the tax using trust and non recourse mortgages. I suggest professional help if a high net worth person wants to own such real estate.
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Old 03-18-2010, 07:01 PM   #49
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I do need to look at it more closely. For a person with middle class tastes buying a 180k condo, I don't think it is really an issue, but you do need to pay attention to the changing rules and the proportion the US property is of your world assets.

For myself, with the Canadian dollar at par in spring 08 and condos selling below cost to build, and using it as a place to hide earning assets from income which would have faced full taxation, it was a no brainer. Similar situation this month actually for Canadians thinking of buying US property. If ever, now is still the time.

The other side of the risk is knowing you are going to spend 30 winters in Florida and knowing that the price of real estate is going to double over the next decade.

For high net worth dudes buying 2 million dollar waterfront and all that, you place the house in a dedicated corporation which never dies and the terms of the incorporation direct the property to the next family member or whatever.
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Old 03-19-2010, 05:49 PM   #50
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Sounds like you got it figured out.
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Old 03-19-2010, 07:49 PM   #51
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Run it by a good X-border accountant or tax lawyer.
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Old 03-20-2010, 03:54 PM   #52
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One thing that can't be repeated often enough is renting before you buy in the neighbourhood you are interested in.

Small things can make a big difference to your lifestyle.

Proximity to the noisy couple on a certain corner of the block.

How far are your bedroom windows from the pool filter noise...one end of a block is very different from the other end of a block.

What direction does your balcony face relative the sun...if you are mainly down there January-March, when it is coolish half the time, you want to sit in the direct sun, not on a north facing balcony in the shade.

Of course no-one does it, and we were no different. We lucked out on proximity to pool and distance from noisier neighbours, but our balcony faces the wrong way. If I was doing it over, I would be on the other side of the block with a south facing balcony.

In Florida, there is no requirement to use a lawyer, and the builder may incent you to use their title company, or whatever they call them there. I called a few lawyers but I could not figure out what value added I was getting from paying $600 to a lawyer to buy a new construction condo. One fellow assumed I would be setting up a corporation to hold the condo, which I felt was overkill and uninformed, given my circumstances.

So I did it without the lawyer. One issue to pay close attention to is who is responsible for the first property tax bill when it arrives in the fall, and to ensure you are not stuck paying for the full tax year when perhaps you only took possession mid-year.

You also want to pay close attention to evacuation and FEMA special flood risk zones, which can impact your insurance costs and how often you would be forced to evacuate in the event of a tropical storm or worse. We had a scare when our area risk profile was downgraded by FEMA a few months after we bought - it was later reversed based on the fact that the elevation had been raised 8 feet by the developer.

Another mistake is to pay the developer asking price. I thought I had done well as they were selling these things for half the 2006 asking prices, however some neighbours who are more experienced worked the developer over really hard and got all sorts of extras thrown in and a reduced price.
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Old 03-21-2010, 11:50 AM   #53
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Sounds good I hope you enjoy it.
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Old 03-21-2010, 02:11 PM   #54
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One of the unforeseen benefits of getting the Florida condo pre-retirement is that it takes the sting out of longing for Florida...and may make it easier to stay in the system a bit longer, get those pension credits up.

As well, most of the neighbours who are second homers are retired or older, so the reality of retirement and what is up ahead for us is becoming much more reality based. You learn A LOT about being 60 or 70, when you are 50, having dinner and partying with persons in that age range.

Lending the condo to family has had more impact than I expected. We may be saving a marriage and saving a few from going bonkers. Being a 2 day drive makes Florida accessible for family busy putting kids through school or whatever who can't afford flying vacations.

I am trying to figure out why someone would bi-locate Alberta/Ontario. None of my business of course. Toronto HQ job, condo in the mountains or family ranch still in the family? Part of the Calgary cabal running things in Ottawa?
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Old 03-21-2010, 02:51 PM   #55
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We wanted an active alternative. Considered Florida or Arizona but there were significant tax advantages to Alberta. Love skiing and mountain biking- and this place is amazing for that. Also wanted something entirely different and frankly was a little apprehensive of the number of old people in Florida. We don't look old and don't act old and don't want to start anytime soon. This town (Canmore) is very young and athletic oriented. Estate taxes as previously discussed was a faily minor consideration.
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Old 03-21-2010, 08:59 PM   #56
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Interesting choice. Mountains, low taxes, chinooks. I love mountains and did love skiing, but my wife does not lean that way. 50 years of battling Ottawa winters has us fed up with snow of any description.

Canmore Station pops up on a search of the town. Looks like an interesting development.
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Old 03-24-2010, 11:15 AM   #57
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They did: Estate tax in the United States - Wikipedia, the free encyclopedia
The issue is quite complex and any interested Canucks can find some information here. As I read it, a Canadian with a $4Million NW and a $500K house in the US would pay 45% of $500K, unless (s)he is clever enough to die in 2010.Since my NW is above the 2011 limit by quite a bit, I won't own any US assets after 2010, much as I would like to.
In 2011, the rate reverts to 55%, unless the government decides to extend the tax break. There are ways around this with Canadian Corporations and trusts though.
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Old 03-26-2010, 07:38 PM   #58
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Interesting choice. Mountains, low taxes, chinooks. I love mountains and did love skiing, but my wife does not lean that way. 50 years of battling Ottawa winters has us fed up with snow of any description.

Canmore Station pops up on a search of the town. Looks like an interesting development.
Know how you feel about the snow. We are in Arizona now-beautiful. But in the long run climate wasn't enough for us. Sitting around for extended periods just for the weather seems lame. Always time to do that when we are "old". Several great developments in Canmore but most very expensive. Quality single detached homes start at around $1.5 million. Ouch.
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Old 04-05-2010, 10:48 AM   #59
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I`m considering having a vacation house that could ultimately lead to my retirement somewhere near a beach in a Caribbean island. I traveled to a little beach town called Sosua in the island of Dominican Republic and found out that most villa owners put the houses in the rental pool while they don`t use it , managed and cared by a rental agency. Maintenance was half of what the rent makes each month, so I guess there`s earnings made if proper research is done, instead of losing money.
I`m still researching but I`ve found nice spots while vacationing the DR. My house in Florida lost its value, I`m planning to retire someplace where my dollars are stronger. In the DR the exchange rate is 36.25 pesos per each dollar, which is more than enough. I`d like to know if there`s a Realtor in the States that could do the kind of work needed to get a home purchased in the Caribbean.
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Old 04-05-2010, 04:59 PM   #60
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I would love to have a vacation home. Like another poster mentioned, it would be best to try out the vacation area by renting first. That way you can make sure that you would really enjoy the area before you buy. If I had the money, I would buy a second home now while the prices are down. But I have a kid in college so no go for me.
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