Arizona home purchase

[Dweb]

Has anyone on the forum purchased a house or property in Arizona ?

Any advice for me ..?

Do’s?

Dont’s?

Thanks!

[Dog hunter]

Had some friends that sold their properties down there because if Biden was elected he was going to approve a 38% capital gains tax on second/vacation homes. You may want to look into that unless you plan on keeping it for a while

[Sundancefisher]

Originally Posted by Dweb

Has anyone on the forum purchased a house or property in Arizona ?

Any advice for me ..?

Do’s?

Dont’s?

Thanks!

Talk to an accountant. You may need to do taxes. Will you be renting it? A know people who bought via a business versus personal. Depending upon age estate stuff can be a pain with out of country assets.

Simple search found this.

https://altrolaw.com/cross-border-ta...-u-s-property/

[waldedw]

We bought a house in AZ in 2009 and sold it in 2019, not much to it, never used real estate or even a lawyer, both parties go to DMV and change the title, have your financial institute in the US run a title search to make sue you don't end up with someone else's debt.

I hear things are changing now though in regard to foreigners owning property in the US so do your homework before you write the cheque.

[roper1]

Be aware that some states consider it part of your estate upon leaving this mortal coil before you sell it. The IRS sending a letter to your estate looking for their share of what you were planning to leave the wife & kids be nasty.

I do know people who bought Az real estate in an LLC for that reason.

[calgarygringo]

I have a buddy that is from here that is in real estate in Arizona. PM me if you would like his contact info.

[sns2]

Dean2 knows more about this than just about anyone.

[Dweb]

Thanks everyone

I will do more thorough investigation before I pull trigger .

[Big Grey Wolf]

In 2009 you could buy new 2000sq ft homes with a pool for around $150k. If you held until economy recovered you made nice profit. Now not so sure of the major economic advantage.

[Dean2]

Here is an amalgamation of comments I ahve made on other threads. If you have any specific questions after reading through this, post them and I will try to answer.


Originally Posted by xxclaro [IMG]file:///C:\Users\Dean\AppData\Local\Temp\msohtmlclip1\01\c lip_image002.jpg[/IMG]
Talking to a couple of friends the other day, naturally the weather and how we like winter less as we get older came up. Turns out we've all been thinking about possible ways to escape for a while in the winter. We talked about the possibility of maybe buying a little piece of recreational land somewhere down south, maybe Texas or New Mexico, something like that. Curious if anyone here has done this? I don't know what's involved or how hard it would be, but any experience or advice is appreciated. Truth be told I'd even be open to looking outside the US, if there are good opportunities in other countries, provided they are politically stable.

Wife and I will have this place payed off in under 5 years, and we've been talking about buying a different place with more land and a bit nicer house. However, we both find the winters rather long and dreary, and are considering just keeping this place and maybe buying something somewhere warm, a place we can escape in winter, and who knows maybe retire there someday! Just speculation for now but I figure it's worth looking into, if anyone here is knowledgeable on the subject.
You obviously want to buy some place warm so Texas, Arizona, Florida, New Mexico, Hawaii and Nevada are pretty much the choices. DO NOT buy in California , the list of issues and problems is far too long to put here. Pick the area you prefer then start doing a ton of research. Property taxes can vary from near zero to $20,000 a year on the same $500,000 property within a few miles of each other. Also, some areas charge non-resident owners as much as three times the local rate.

Check in detail the zoning and development laws, unlike Canada many areas give you no protection from having a large industrial plant built right next door, or a gas/oil well etc put in.

Inspect the house carefully and look in detail into the build quality. U.S. building codes are generally far more lax. Many houses in Texas have almost no insulation. Also, things like termites, rats and other pests are very common and can be expensive to deal with.

Do not buy in an area close to the Mexican border, near large prison installations (many family and friends of inmates move to communities close to these prisons) or in the same towns with large amounts of slum areas. Check out the crime stats, and types of crime for the immediate and surrounding areas within 50 miles. You want to find places that have homogeneous higher end housing, stable industries, low crime rates, low taxes and good municipal services. Remember, location, location, location.

Buying property in the States can work out very well but you have to be prepared to do extensive research on your own so you know exactly what you are getting into.


You will want to take a REAL hard look at the economics of doing this in Hawaii or Arizona. You need to look in detail at the specific Island and location you are looking at. Property taxes vary greatly, even from one part of town to another, as do the taxes on rental properties. Some areas treat you like a Hotel and have all sorts of hospitality taxes and levies and as you have already seen, non-residents of Hawaii are taxed very heavily in most locations. You also need to factor in the cost of the management company, condo fees/yard maintenance, cleaning and repair costs as well as quite high fumigation costs.

A friend was trying to talk me into investing with him on a few properties so I ran the numbers on a whole bunch of options on the big island when the dollar was still 90 cents. None of the high rise condos worked unless you had 100% rental and that won't happen. Townhouse style near the beach was a bit better at 92% and detached with two rentable suites was the best at 80%.

The other thing I will say is, unless you are spending at least 2 months a year there, you are way better off renting. Put your down payment into a good safe Bank stock yielding a 4-5% dividend, which is tax free up to $41,000 a year each, and use that income to pay for the trips. I should have said that we used the Big Island for a base line as it had the cheapest total costs of ownership. It had the lowest property taxes, about $10/1000 at the time and did not charge the double rate, A class properties" or the over 1 million premium that Oahu does. It also has one property tax rate for the whole Island. It did not charge hospitality tax on short term rentals. It is also not near as popular as Oahu so rental occupancy will tend to be lower.

Property taxes on the Big Island are relatively low compared to many other U.S. jurisdictions. Chicago is 5 times as expensive and certain parts of Phoenix are 8 times higher but places in Apache Junction are less than Hawaii, so like I said, it is really location specific..

Buying in Canada or the U.S. may or may not be a money making proposition but at least you know you will retain title to your property. Buying in what are effectively third world countries means the property is cheap, but there is a very good reason why demand for them is low. You just never know when your ownership may be completely invalidated. On top of this risk, many of these locations lack the civil law structure that allows you to enforce your property rights. For instance many allow squatters to obtain effective right of occupancy after only a very short period of living on the property. Another issue is zoning or lack thereof. In Belize there are virtually no zoning laws, and even in the States you can easily end up with heavy industry or a sour gas well mere feet from your property. Also in Belize specifically, land you think is yours may not be if you are on waterfront, or along a road. This is true in many places.

These are only a couple of the risks you need to research and understand. Be darn sure you research in detail all the legal aspects of owning and enforcing property rights before laying down money on foreign property.

[Dweb]

Maybe I’ll just look somewhere in Canada like okanagan bc area less risky.

Too scared now

[Dean2]

Originally Posted by Dweb

Maybe I’ll just look somewhere in Canada like okanagan bc area less risky.

Too scared now

Aside from the 35% exchange rate hit, buying in the Okanagan isn't materially less risky than buying in Arizona. Any time you are buying outside your home area you need to make VERY sure you full understand. Vancouver and other parts of BC now have vacant property surcharges, non-resident surcharges and luxury home surcharges on their property taxes that can easily quadruple your property tax rate, which is already high, as well as non-resident restrictions on land transfer. There are also a number of areas that you can't get full insurance coverage in the Okanagan due too fire risk as one issue.

The only answer is detailed and full research BEFORE you plunk down your hard earned Shekels.

[wannabe]

Originally Posted by Dweb

Maybe I’ll just look somewhere in Canada like okanagan bc area less risky.

Too scared now

Keeping your money in Canada sounds like a very smart choice.

[Ken07AOVette]

I would be worried about foreign holdings seizures or added on foreign investment taxes that the Yankee trudeau comes up with, he has shown already he hates Canada

[NewGuard84]

Lots of good advice here re: ensuring one knows the full picture.

I will add/reiterate a few considerations that apply South and in Canada:

1. Using a realtor can potentially be a free and valuable resource for a buyer;

2. Accounting advice is important. In your circumstances, you need a specialized accountant who can advise you on the US and Canadian tax considerations.

3. Using an experienced real estate lawyer in the State/Province you are buying in is essential: Transaction processes exist in each jurisdiction for transferring title and funds and avoiding other risks. Maricopa County's Land Titles system has some similarities to Alberta's, whereas BC's has some special differences. It is worthwhile to have local guidance and use established local processes.

Good luck!

[liar]

I have a good friend that bought a place just outside of pheonix . Great place and he really enjoyed it . After about three winters he had explored all of the surrounding area and the last two years he owned it he only spent a few weeks there per year as he headed to other areas for the winter (other states , mexico) . Something to consider , once you spend enough time at one place you are not on vacation anymore , you are just home, like you are now . Food for thought .

[Battery]

Honestly probably just easier renting a place. That's what we do every winter. $1000-$1500 every month for 5 months is a lot cheaper than buying a place. No return on investment, but no taxes and no upkeep costs. You can only spend 6 months a year down there anyways unless you're a dual citizen which brings on it's own set of tax problems.

[Dean2]

Originally Posted by Battery

Honestly probably just easier renting a place. That's what we do every winter. $1000-$1500 every month for 5 months is a lot cheaper than buying a place. No return on investment, but no taxes and no upkeep costs. You can only spend 6 months a year down there anyways unless you're a dual citizen which brings on it's own set of tax problems.

Excellent point. Something to think about, for 5000 a month you can rent a high end 3 bed room house with pool, gardener and house keeper in a gated community. Even for 4 months that is only 20,000, compared to having a million tied up to live in the same place, plus all the carrying costs. It is VERY hard to make owning a self occupied second residence pay after costs and taxes, even if the property goes up in value.

[liar]

Renting is what my buddy has done . There are storage units everywhere so anything he leaves behind is secure if he lets the rental go .

Something else to think about , any place of residence has to be checked regularly for insurance if it is vacant .

[Dweb]

I’m running scared guys!

This is overwhelming

Thanks for the eye opener

Guess I’m staying my butt here !

Renting a place seems like a pretty risk free option

[Fur]

Vacancy insurance is a nightmare. Most people dont call their insurance and let them know, but if something happens than your not insured. If you switch over to vacancy insurance your paying an arm and a leg. That goes for Canada also.

Ive owned and sold. Renting is easier and you have more options.

[liar]

One last thing , if your renting and the neighbours turn out to be crazy , its easier to get away . But i guess that applies to at home here , also .

[Ken07AOVette]

plus if you are in the States (or anywhere else) and your primary home is empty, if it burns down the insurance company will say you are not covered.

[Dean2]

Originally Posted by Ken07AOVette

plus if you are in the States (or anywhere else) and your primary home is empty, if it burns down the insurance company will say you are not covered.

There are ways to avoid having things like this happen. Thousands of snowbirds go south for up to 5 months every year. You need to get from your insurance, in writing, what the inspection routine must be, how many times per week, or what type of monitored alarm system is required. I know with our current insurance company, as long as I have a monitored alarm system that also has smoke and water motioning no inspection is required, but we have someone come in every 4 or so days to water the plants anyhow, I am covered when the house is vacant, no need to notify them of the vacancy, but Ken is right, this is one more step you need to look at.

The issue of gains on the property being taxable in Arizona, as well as under Canadian tax, plus any rental income being taxable in both jurisdictions is another issue that needs to be understood. That and transfer costs to sell in the States are much higher than in Canada so before you buy in any location I would suggest renting in that area for a couple of years first because swapping houses is not cheap.

Like I said earlier, none of these are a reason to not buy, just important to understand all the ins and outs whether buying a second home in Canada or anywhere else.

[Dweb]

You have all opened my eyes and I will take the advice of finding a rental , I,like the idea of being able to walk away.