Now is the Time to Invest in that Vacation Home

By: Joe Samson
The timing could not be better for a south-of-the-border investment in a vacation rental or second home. With the current U.S. housing slump, house prices in many areas have fallen lower than they've been for years. Not only have prices gone down, but there is a huge amount of inventory for potential buyers to choose from. Whether you're looking for a mansion, a condo or a beach house, the choices are there.

In the Florida communities between Palm Beach and Fort Lauderdale a two-bedroom oceanfront condo can be had in the $300,000 range. Single-family homes and condos with access to the Gulf are available in the mid to high $200,000's. Imagine a one-bedroom condo with a boat slip for under $100,000!

The number of foreclosures, pre-foreclosures, and new builder homes has resulted in a glut in the market with a huge availability of homes. In order to unload their investments, builders are offering thousands of dollars in incentives, and in some cases homes are being sold for 2006 prices.

What with the lucrative market combined with the high value of the Canadian dollar, this is an ideal time to purchase a vacation home. The success of this investment depends on the strength of the area you purchase in, however. Select an area that you know is strong and will eventually bounce back such as Texas, Colorado, or Boston.

Before making your purchase do your homework and get a thorough understanding of the tax laws for the state and country you plan to invest in.

In the case of a couple, it may be more advantageous to put the property in one name rather than both. Certain expenses may be written off especially if the property is being rented.

If investing in the U.S. you'll have to file a tax return in both countries. If you don't, your tenants are required to hold back 30 percent of the rent for taxes. Also, you will have to pay taxes on any profit when it comes time to sell the property. There are also certain risks involved in financing in a foreign currency if you plan on assuming a mortgage for your property.

The most important consideration of all, ensure that in the event of a decrease in the Canadian dollar, you can still afford the U.S. prices because if the dollar were to go down to 80 cents, your mortgage just increased by 20 percent.



About The Author:
Joe Samson, a Calgary REALTOR who has been helping clients achieve their goals in the Calgary real estate market since the year 2000. If you'd like to know about open houses in Calgary, or to see video open houses, you can view them directly on JoeSamson.com.