Buying a House in the USA - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

OilersBaby · 03-13-2009, 01:16 AM

This question isn't for me, as I'm already a homeowner in the USA and an American citizen, but for a friend of mine living in Calgary. She wants to buy a home in the USA...isn't a greencard holder or a citizen of the USA. I know Canadians buy property in the USA (and elsewhere) all the time. Are there any tax implications...ie do you have to pay tax in the USA and in Canada for a house you buy in the US if you're a Canadian resident and buying in cash? If you put Canadian money in a USA bank account and then pay for the house, is the IRS going to be knocking on your door wondering where you got this money from (since you have no record of living or being in the USA?)

Anything else I'm missing or should know?

Thanks you guys.

fredr123 · 03-13-2009, 08:11 AM

Maybe Eric Vail can shed some light on this subject?

Canada 02 · 03-13-2009, 08:18 AM

can't speak specifically to your friends situation, however, I am a Canadian who moved to the USA. The biggest issue for me was establishing a credit rating in order to get a mortgage that didnt have a ridiculously high rate

Sample00 · 03-13-2009, 08:58 AM

Quote:

Originally Posted by Canada 02

can't speak specifically to your friends situation, however, I am a Canadian who moved to the USA. The biggest issue for me was establishing a credit rating in order to get a mortgage that didnt have a ridiculously high rate

how would a Canadian, Canadian income earner, establish a credit history in the US. I wouldnt think that a US Credit Card company would give a credit card to a Canadian or is my thinking wrong on that?

troutman · 03-13-2009, 09:01 AM

Eric Vail should have some info about that for you.

Canada 02 · 03-13-2009, 09:02 AM

Quote:

Originally Posted by Sample00

how would a Canadian, Canadian income earner, establish a credit history in the US. I wouldnt think that a US Credit Card company would give a credit card to a Canadian or is my thinking wrong on that?

small local bank gave me a credit card with a $500 limit and a car loan. Pay off both in full as well as all phone and utility bills

edit. oops, didnt catch your point about being a Canadian income earner. Steady job in the US probably helped a lot as well

ken0042 · 03-13-2009, 11:14 AM

To get US credit I would say that a department store CC might be the way to go. I know my parents have a JC Penny Card, and I also know that can get a Bay card here in Canada just by showing my Visa card.

Just make sure if you get a store CC you buy something on it, then make minimum payments for a few months to show a credit history.

I also wonder if a Canadian bank that operates in the States might be able to get you a mortgage. Like TD or RBC.

Bagor · 03-13-2009, 11:22 AM

Quote:

Originally Posted by Sample00

how would a Canadian, Canadian income earner, establish a credit history in the US. I wouldnt think that a US Credit Card company would give a credit card to a Canadian or is my thinking wrong on that?

I "heard" having an American Express account was one way of doing it in that they would recognise credit history.

Sample00 · 03-13-2009, 11:40 AM

Quote:

Originally Posted by ken0042

To get US credit I would say that a department store CC might be the way to go. I know my parents have a JC Penny Card, and I also know that can get a Bay card here in Canada just by showing my Visa card.

Just make sure if you get a store CC you buy something on it, then make minimum payments for a few months to show a credit history.

I also wonder if a Canadian bank that operates in the States might be able to get you a mortgage. Like TD or RBC.

When I worked at CIBC a few years back, we were unable to do this. And I believe that the US arms of the Canadian banks are a seperate entity. I would think thought that going through a US Mortgage Broker might be the best method of securing financing in this situation.

Acid Rush · 03-13-2009, 11:51 AM

I suggest getting a secured credit card (they usually give you like $300-500 credit limit) they pay off the the whole amount every billing. This should establish your credit history then they would start sending you applications thru the mail. Dept store credit cards is also good as long as you pay off the whole thing or min balance every billing statement. You can also ask a friend who's an American citizen to co sign your loan.

Regarding taxes, I am somewhat sure that if you do have a bank account in the US and you're not employed in the US and you're not a permanent resident/citizen of the US would raise some flags. There's also a line in the tax forms here in Canada where they ask you if own property outside of Canada valued more than $100k CDN. Unless of course you don't declare it.

My two cents. Please correct as I am somewhat unsure of the last paragraph.

Sample00 · 03-13-2009, 12:21 PM

My apologies to Oilersbaby for derailing the thread.

It seems, and this is somewhat hearsay, that if you own a Canadian AMEX card and have had it for two years, you can apply for an American AMEX card and they will issue you one.

This will then go towards your American Credit rating.

just rumour but for those of you with AMEX cards, might be something worth looking into. I am going to contact AMEX to see if that is in fact the case and if it is, I will apply for one, just so that in a couple of years from now, I can get the US one. I am not in a position to purchase a home there yet anyways.

Nope, skip that, I just spoke with AMEX and they said you must have a US social security number.

Incinerator · 03-13-2009, 12:40 PM

If you buy in cash, it's fairly straightforward, you buy it and get the utilities and the jurisdiction to mail your utilities + property tax bill to your Canadian address, then you pay it with your US dollar account here. As a Canadian, you can stay in the US for 6 months a year. Or if you are just looking to rent it out, you can hire a property management company down there to take care of everything for you, they then take their cut off the rent.

Some of those houses are selling for car prices up here right now, so I don't think anyone who's looking to buy would be worried about a mortgage anyways. If you can't afford to pay $40K in cash you probably shouldn't buy a house in the US.

Sample00 · 03-13-2009, 01:01 PM

Quote:

Originally Posted by Incinerator

If you buy in cash, it's fairly straightforward, you buy it and get the utilities and the jurisdiction to mail your utilities + property tax bill to your Canadian address, then you pay it with your US dollar account here. As a Canadian, you can stay in the US for 6 months a year. Or if you are just looking to rent it out, you can hire a property management company down there to take care of everything for you, they then take their cut off the rent.

Some of those houses are selling for car prices up here right now, so I don't think anyone who's looking to buy would be worried about a mortgage anyways. If you can't afford to pay $40K in cash you probably shouldn't buy a house in the US.

not to knock you off your high horse or anything but not all places in the US have $40,000.00 homes available. And if they do, I am really not into living in a 1972 Mobile home.

ernie · 03-13-2009, 02:28 PM

Recently moved to the States and purchased a home.

It wasn't that bad for us because our canadian mortgage was with RBC, so we just used the american wing of the bank. They were used to such things and being on the same computer system as the rest of RBC, they simply used our Canadian credit ratings. Most banks will not check a canadian credit rating and some banks with a presence in both the US and Canada don't talk to each other. So I'd advise using a bank that has Canadian and American arms that talk to each other, or using a bank that is willing to use the canadian credit rating.

If she's not going to be using it as a residence or living fulltime in the states there are certain rules on how much money needs to be put down on a down payment. I think it's more than if you are a foreigner on a Visa buying a house to live in (like we were...mandatory 20% I believe). We do pay a slightly higher rate (talking 0.2 % higher not multiple percentage points) but i believe that is again tied to being a foreigner.

Also be aware that they do closings differently than in Canada and that each state has their own way of doing things and it's important to have a real estate agent or broker that understands that and will keep you up to date with what needs to be done. Not all agents fully grasp that and you can be left hanging in the wind on closing day when you haven't done everything that's needed.

For us, we were told it was necessary to have a US based bank account. From what I understood they can not legally issue a mortgage otherwise. Could be wrong.

Ice · 03-13-2009, 05:00 PM

Quote:

Originally Posted by Sample00

not to knock you off your high horse or anything but not all places in the US have $40,000.00 homes available. And if they do, I am really not into living in a 1972 Mobile home.

Haha, you can't even get a mobile home in my city for 40,000.00. Its funny the sterotypes about the US I read here so frequently.

Ice · 03-13-2009, 05:02 PM

Quote:

Originally Posted by ernie

For us, we were told it was necessary to have a US based bank account. From what I understood they can not legally issue a mortgage otherwise. Could be wrong.

I think this might be right. The bank account is easy enough to set up. No social security number required, you just have to fill out a W-8 at the bank when you open it reflecting your foreign status.

OilersBaby · 03-14-2009, 06:06 PM

So its going to be a cash purchase, so no credit necessary (although thanks for that info anyways)......are there tax implications for Canada and the USA both? NOt sure how the tax stuff works as related to the house.

Thanks!

Shazam · 03-14-2009, 06:23 PM

Quote:

Originally Posted by Sample00

not to knock you off your high horse or anything but not all places in the US have $40,000.00 homes available. And if they do, I am really not into living in a 1972 Mobile home.

Detroit's got $4000 homes available!

blood_hound2005 · 03-15-2009, 12:19 AM

Quote:

Originally Posted by OilersBaby

So its going to be a cash purchase, so no credit necessary (although thanks for that info anyways)......are there tax implications for Canada and the USA both? NOt sure how the tax stuff works as related to the house.

Thanks!

If you declare the property you will pay tax if not tax will only be paid in the USA