Considerations for Snowbirds who are selling

David A. Altro, with Alexia Gezink/April 14, 2024

Due to a shift in political climate and legislation in the U.S., a large portion of inquiries to our firm as of late are clients who have decided to sell their second home in the U.S. As this topic is becoming more salient for Canadian snowbirds, David was interviewed last week by the Wall Street Journal to share the perspective of Canadian clients with U.S. properties feeling the impact of U.S. tariffs and border crossing issues. Clients are calling David every day asking for representation to sell their U.S. property as they are uncomfortable with the foregoing issues plus further uncomfortable with talk of Canada being the 51st state, and the Prime Minister being called Governor.

Clients need to be aware that there are numerous factors to consider when selling property as a Canadian citizen and/or resident, including the preparation of closing documents; whether the buyer or seller pays for certain costs, such as land transfer tax or title insurance; title defects; terms and conditions of the contract for purchase and sale; among other matters.

A significant issue is the withholding of 10-15% of the gross sales price to be remitted with special forms to the IRS at closing. That will mean you don’t see that money for a lengthy period until you get a full or partial refund from the IRS. Importantly, the withholding is applied against the gross sales price and not against the capital gain.

As a Canadian resident and/or citizen, it is important to have an excellent realtor but relying solely on a US realtor to assist with or even be aware of all these legal requirements is not recommended. Your realtor brings all the parties together but does not act as your real estate or tax lawyer. Likewise, there is always a title company to escrow the funds and register the Deed and provide title insurance, but the title company does not represent you. They are processors but not your Florida real estate lawyer. To avoid any complications, retaining legal counsel to represent you and advocate for your best interests would be of benefit in your short- and long-term planning goals.

If in the short term you wish to sell because of the sense of uncertainty that is being felt among fellow snowbirds, our firm will be here to help. We will ensure that the legal issues are dealt with, and the important tasks and paperwork are completed.

If in the long term you don’t wish to completely shut out the idea of spending your winters South of the border, now is a great time to buy, where prices are accessible, and the market will eventually bounce back. Investing in a place like Florida will be beneficial in the mid to long term, where there will always be those on the lookout for a place to call home by the ocean and in the sunshine.

Just as there are important considerations and paperwork that cannot be missed while selling U.S. property, the same goes for when purchasing. There are tax and estate planning implications that if unaware of, may introduce a financial burden, and create complications for your beneficiaries.

Whether you are selling or purchasing property down South, our firm is well equipped with attorneys licensed on both sides of the border, who will ensure that you don’t miss anything significant that will cost you.