If you’re a Canadian citizen thinking about purchasing property in Florida, you may have a number of questions. Though making a big investment across borders is a big decision, you can be safe in the knowledge that Florida is a great choice.
If you’re reading this, you’ve already taken the first step and chosen the Sunshine State as your location of choice. Now, having a knowledge of a few key factors that are relevant to investing in Florida will help you put your best foot forward.
Top Considerations for Canadians Investing in Florida Real Estate
There are many reasons why Canadians head south to invest in Florida. The most common reason is to buy a vacation home. Others invest in property to use as both a vacation home and rental property. According to Western Investor, an incredible 55% of the 6.6 billion dollars spent on U.S. real estate by Canadians between April 2022 and March 2023 was spent in Florida. If you’re heading for the Sunshine State in search of sun, sea, culture, and attractive prices, the following insights can help you plan for a successful Florida property purchase.
1. Canadians Face No Restrictions on Purchasing Property in Florida
The first consideration when buying foreign property is understanding if non-citizens can purchase homes for investment or as a second home in Florida. The answer to this is yes. Foreign citizens including Canadians can join the property market in Florida without a special visa or any special requirements. However, purchasing property requires Canadians to take some additional steps. These include:
- Getting an identification number for tax purposes
- Opening a U.S. bank account
- Paying any fees or taxes associated with purchasing property
As in any country, rules and regulations surrounding real estate purchases in Florida will likely be different from your home country. Do your research now to avoid any surprises down the road. It’s also important to be aware that purchasing a property in Florida will not automatically qualify you for a U.S. visa.
Canadians will be asked for several documents to start the process. You may be asked to provide:
- Identity documents
- Proof of address
- A NEXUS card if you have one
- A copy of your credit reports
- Proof of income and/or employment
- Your down payment. This tends to be 20% of the purchase price.
An expert in real estate can help you negotiate the legal processes required to purchase your dream property in Florida and ensure legal compliance.
2. Hire Professional CPAs to Make Most of Florida’s Tax Benefits
Florida offers favorable tax laws for investment compared to many U.S. states. While federal taxes are the same for all U.S. residents and homeowners, Florida residents don’t pay state personal income tax, which means they also don’t pay capital gains tax or estate tax at the state level.
A reputable Florida CPA firm can help you take full advantage of the Sunshine State’s tax benefits and make strategic purchase decisions. Accounting and tax professionals can also provide sound advice on how to protect your assets so that you can get the most out of the eventual sale or succession of your home.
3. Take All the Costs into Account
Apart from the sizable deposit you may need for your new property, there are several other costs involved in a property purchase. Closing costs can range from around 2-5% of the purchase price of your property. Realistically speaking, with a median sale price of just over $400,000 in Florida, buyers will generally pay at least $8,000 in closing fees.
As foreign buyers often need more help with the legal processes involved in purchasing real estate, it would be wise to factor in some legal fees on top of the standard closing costs.
4. Location Is Key When Investing
Whether you’re purchasing a vacation or rental property or consider your Florida property a nest egg for your retirement, your property’s potential for growth is an important factor to keep in mind.
Investors must take demand, growth potential, amenities, and location into account when looking for a property in Florida. Factors like proximity to beaches or tourist attractions and areas with a booming jobs market can be a good place to start.
Where to Invest in Florida?
Florida has some obvious choices as far as a location for property investment. The following cities are all great options:
Miami
Miami is an internationally renowned city that is famous for its vibrant culture, food, and beaches. Savvy investors may also know it for its strong rental potential. Though investors may find prices to be higher than in other places in Florida, its potential may sway many people to splash the extra cash.
Orlando
Orlando is a thriving city with a booming tourist industry that could be interesting for investors looking at short-term rentals. Long-term rentals could also be a possibility with many workers potentially looking for accommodation.
Fort Lauderdale
Fort Lauderdale offers a growingly desirable location with a mix of residential and vacation rentals. Apart from its own points of attraction, its proximity to Miami makes Fort Lauderdale an appealing location for many investors.
Conduct Thorough Market Research Before Investing
Understanding the ins and outs of the Florida property market is tricky for anyone. When you’re located in Canada, it could be even more challenging! That’s why taking time to do your research before making the move is critically important. Consult a local professional, being careful to get the whole picture both of the current and future outlook for investing in Florida.
5. Keep Your Financial Goals Clear
When investing in Florida real estate, always keep your financial goals at the forefront of your mind. Are you interested in the long-term appreciation a property can offer, fix-and-flip jobs, or properties with the potential for short or long-term rental?
When considering the type of property you’re looking for, assess your risk tolerance and how much you’re willing to put into your property. Though flipping properties can be a great business, it can be risky and stressful too.
Join the Growing Canadian Expat Community in Florida
With the number of Canadians investing in Florida going through the roof, many more may be tempted to make the move (either permanently or seasonally). Considering the many financial and lifestyle benefits Florida provides, it’s no wonder so many foreign investors look to Florida for a fun but financially sound investment option.
Though Florida can provide excellent investment potential, it’s essential to consult professionals with in-depth knowledge of the real estate market and the legal and financial implications of investing in Florida. With the right help, you will be able to enjoy your property in Florida for many years to come.
