Buying a vaction home - It's a whole new ballgame.

While you're at it don't forget to research past hurricane paths, no guarantees but useful to know:)
 
Bob n sue I agree about it being the way it use to be i was just saying that having a home that's still worth x and only wrighting 40% of the value before the melt down I wasn't even asked for income or employment history this last time I was rung through the ringer with the bank and this bank I've been doIng buissnss for 20+ years and have held my mortgae and don't sell it off on the secOndary market I don't mind just more paper work. The 0 down mortgage and 80/20 mortgage and all the other creative financing that was around the crash was bound to happen who in their right mind withdraws 100% of equity and buys a second home which was over priced to begin with or buys a car a boat or anything else that depreciates at an accelerated rate but I knOw a ton of people did and got hammered when everything fell apart but banks didn't care where you got the money you just got it sorry to go off guys I'll stop now
 
Bob & Sue said:
I would consult a financial adviser on this one after 2 years of being a rental you will owe capital gains on it there are some very tricky rules on this type of transaction with different disclosures to the IRS.
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Thanks but I am not going to keep it that long as a rental. I want it gone before then!
 
Burnt Store Marina, Punta Gorda, FL offers easy intercostal and gulf access. We have boated out of there for years on our 270 and our new to us 280. We have also owned a condo and now a home for 10+ years!!


Sent from my iPad using Tapatalk HD
 
Frank you made some excellent points in your post.
I bought a home in Florida last November, being a Canadian and buying a foreclosure was a nightmare. I ended up having a holding company buy it and I bought it from them, all my money but it was the only way I could do it. I used TD Bank because they offered insurance, when I was closing I said I needed prof of insurance for the HOA, TD said they were not offering insurance in my area at this time WTF. I had to prove where all my money came from, I had a large mutual fund that I was taking money from, they said I had to prove where the money came from that went into the mutual fund. I had to get statements from my bank in Canada, then they demanded I show them prof of insurance on my house in Canada, WTF. What does that have to do with anything, well it seems US banks can't do the kind of checks necessary on someone in another country but they can get the needed information from my insurance company. Once they verified that my funds were legal I had to get it into the country, not an easy thing to do. TD bank will only allow you to transfer $5,000.00 US a day into the US, Royal Bank will allow you to transfer $25,000.00 a day, the US government says only $10,000.00 a day, WTF. I wanted to do everything legal and have the property in my name, I've read stories of people buying in Florida and finding out that the property was not transferred properly and they did not own it. I used a Title Company in Lakeland that did a great job and the price was really reasonable. There is also a 45 waiting period for a non resident of the United States when buying property, if you want to buy a HUD home once they except your bid you must pay in 48 hours, WTF. When I placed my first bid on a place they were able to use my social insurance number from Canada but the process prevents a non resident from closing because of the waiting period. Like I said it was a nightmare. The first thing that the city of Lakeland did was double my taxes, welcome to the USA. I am paying taxes on double the amount that I paid for the house, WTF. As a nonresident I cannot appeal this or even question it, as Frank stated it is based on other properties in your area. The trouble is in 2008 people paid 4 times what I paid for this place and they have not walked away from there places or defaulted, seems there are people with cash that will ride this out. Once you do the average they pay less and I pay more, a nonresident cannot homestead their taxes in the US. It's been a real eduction buying a place in Florida, am I glad I did it yes, would I do it again, I sure hope not.
There is a warning on the IRS web site and the Canadian Tax web site that warns Canadians to file a form with the IRS that all taxes on your income in Canada has been paid to the Canadian Government. This new process and form came out 3 years ago and it was a formula to figure out if you need to file the form. If you are a Canadian and spend more than 3 1/2 months a year in the US you need to file the form or the IRS could come after you for tax on income made in Canada.
Here is a link to the information.
http://www.bdo.ca/library/publications/tax/taxbulletins/Tax_Issues031708.cfm

Ken
 
Yeah, but where else can you get that view...!


I am sure the Canadian residency changes the landscape, but even as a US citizen buying and owning property on the beach is a learning experience. Generally, I find Florida to be a tax friendly state, but there are a lot of ways you can get your hat, shirt and a$$ handed to you if you are not prepared. Do your homework and figure out the system and owning beach property is fun and rewarding.

No reservations required; just put the key in the door.
Gives your kids/grandkids a reason to spend their vacation with you instead of at some theme park somewhere. (they understand that free is good)
restaurants are usually great; and the seafood is fresh
Best boating anywhere
and, it don't snow!
 
In the little looking i've done, the whole canal thing seems to be a big factor depending on who's responsible for dredging. Some towns do it, some towns can't afford to do it, some towns the owner is responsible, some towns the HOA is responsible. I looked at places like Cape Coral where you can find some really really cheap homes on the water, but the canals are all silted in, or a lot of them are. So I would add that to your list of things to ask.
 
And, look at the thread from yesterday about marina hurricane plans. Having a boat in Florida means you also MUST consider weather. In my decision making process about this, we decided that we preferred a house on the beach than in condo on a canal.

I choose to keep my boat in a marina with a hurricane plan, 24 hour security and qualified service on site and, at the beach house, we have a constant beach view of the Gulf of Mexico which I think beats watching some retired guy from NJ named Veto sitting in a lawn chair by the canal.
 
As a Canadian I was also told if I rented out property in the US it would be concidered commercial property. If any repairs were required I could not do them. If I did not rent the property out I could do repairs. I was also told the under the table rent was not a good idea as the IRS is in need of money and they would eventually find out and I could be charged with tax evasion.
Sounded too scay for me.
I looked at purchasing a boat in some US ocean states. The rules in one state was if it was in their water for 60 days it was concidered perminate and taxes applied. This took me a few months to find out.
 
northern said:
As a Canadian I was also told if I rented out property in the US it would be concidered commercial property. If any repairs were required I could not do them. If I did not rent the property out I could do repairs. I was also told the under the table rent was not a good idea as the IRS is in need of money and they would eventually find out and I could be charged with tax evasion.
Sounded too scay for me.
I looked at purchasing a boat in some US ocean states. The rules in one state was if it was in their water for 60 days it was concidered perminate and taxes applied. This took me a few months to find out.
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I can't speak for other states, but your first paragraph is definitely not true in Florida. In fact, most condo owners here do rely on rental income to cover some of the costs of a second home. They treat it as self employment income and run the condo/house as a business, netting the costs against the rental income to get a net income for tax purposes. Where they get in trouble is when they dump every cost they can think of or manufacture into the business and try to get a new loss........24 gallons of red barn paint that you used at your primary home won't work and guarantees an audit.

As far as repairs, this is a local issue with local codes and every location is different. Where we are, as long as the project is under $25,000 and does not involve the roof, you can do the work your self or hire someone. Roofing and larger projects require a state licensed contractor. The finished roof must be done by licensed contractor or signed off on by a licensed engineer or architect.

The boat sales and use tax is also differs by state. IN fact, if you bring your boat to Florida from another state, and have owned it 6 months or longer, you probably don't owe any sales or use tax.


My point is that you cannot operate on the basis of hearsay or anecdotal information on these issues. You need to examine the law itself or at a minimum involve a good accountant or lawyer in the locale you are considering.
 
Another thought based on experience - consider as far north as Charleston, SC. Climate from Charleston to Jacksonville is very similar (Low Country). We bought our second home (soon to become our only home) in Beaufort, SC. Its right not on the water but its coastal living and water is all around. We love it.
 
The legal issues iProf described do sound a bit crazy. But I can believe it. I have wired large sums of money across borders. . . .I thought the $10,000 dollar thing is just a reporting limit. You can do it. . .but the IRS and the rest of the goobermint is informed of the transaction. Not an issue if everything is above boards, but somehow I think your bank didn't want to fill out the form. Although, I must admit the last time I went over $10K was a few years ago. I wouldn't be surprised if the reporting limit was more like 35 cents these days.

I ran into insurance problems with a summer home. Being in a different state seemed to be a huge issue. My original company tried to pull a bait-and-switch at the first renewal ($600 policy became $3600 with less than 10 days notice). When I went shopping, 25 of 28 companies I contacted laughed at me when I asked about coverage.
 
I may be a r@d!c@l and only my very humble opinion

Northern: My acountant told me to be very carfull as my estate could be probated through Florida and I would loose a lot (I would be dead but the estate would loose).

Only your estate in the good ole USA should be subject.

Cod: Another BIG thing to consider that I didn't see mentioned is to find out if all the owners are current with paying there common charges. Many of these complexes have owners who are not paying and you would want to know exactly what that number is because if its a high percentage, you want to avoid that particular complex.

Rule number one of Condos. Coops seem favorable in this market.


Bucit: Vacation homes are considered second homes and the rates and terms are much better than investment property.

are not all homes investment properties. You can use an adjective but all properties are investments. They are not just a roof over your head. Property must have a return else it becomes a depreciative asset. Enyone still have the Vette or Cuda from the 60 and 70? Well, then...


Bob and Sue: I would consult a financial adviser on this one after 2 years of being a rental you will owe capital gains on it there are some very tricky rules on this type of transaction with different disclosures to the IRS.

No capital gains until conveyance on asset (property) if held as a company. Remember everyone that companies are not people (snicker) unless you sell. Then it shows on the persons (companies) return. For sure incomes (worth) do apply here. Disclamer: Please talk to your financial adviser.

Iprof:

The IRS is looking at all money flow in or out of country. For that matter within- deposit, say, 6k in your account and wait for the questions from a teller here. A teller is running a list of questions to ask. Note that for the first time Canadians have a greater household wealth than Americans do now. I looked at investing in Canadian banks return. Would I be considered a criminal? Appears so.
 
So, what is anybodys experience of condos vs coops? We've found a couple coops for sale, but their fees seem higher. What are the primary differences between the two?

I tell you what though, there a lot of condos for sale in Florida, with prices all over the place. We are still trying to determine what we want. We go down to Ft Lauderdale in Mid August for our first look at them.
 
Discovery said:
Bucit: Vacation homes are considered second homes and the rates and terms are much better than investment property.

are not all homes investment properties. You can use an adjective but all properties are investments. They are not just a roof over your head. Property must have a return else it becomes a depreciative asset. Enyone still have the Vette or Cuda from the 60 and 70? Well, then...
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Not to split hairs but a vacation/second home is considered one you intend to use or live in. An investment property is one you are GOING to rent out to make money on or atleast have the tenant pay the mortgage to the point it's paid off and you sell for profit.

Homes may be considered an investment but ask all the poeple in FLorida, Nevada, California and Arizona, you know the ones who bought in 2004-2008, the ones who paid $300k and the homes are now worth $100k. I guess you could call that a bad investment? Our home prices haven't increased much since the decline so anybody buying a home nowadys as an investment is kedding themselves. It truely is a roof over you head and hopefully years from now you will make a little something off it.
 
We spend the winter in Mexico (4 months). The unit we rent the owner paid 400,000+ for it. There are many in the area that paid similar. The sad part most of the people seem to have borrowed to purchase. We rent it for a little more than 1,000 a month including all utilities.
As noted by Bucit they are not a good investment. We think of buying as it would allow us to leave things in the unit when we leave. But based on the rent and the present asking price we can rent the place for 40 years before it would make sence.
USA seems to be a bit difference as it seems prices are not going down any more. We will continue to rent.
 
Unless you want to permanently move to FL from MN I wouldn't even consider buying a place since there are plenty to rent. I just purchased a home in Scottsdale AZ 3 months ago but our intent is to move there permanently as as soon as our house here in The Chicago area sells. Purchasing a seasonal residence in today's environment makes poor financial sense unless you can rent it out the remainder of the year which would likely be very difficult. I can boat year round in AZ just like FL but in fresh water and on a smaller body of water which is fine for us. I just closed on a 1.875% Libor based interest only mortgage which puts my mortgage payment less than I have on either of my vehicles. I put 30% down but the bank required 25% because the Phoenix area still has declining property values overall but where I bought values are stabilizing if not rising slightly. As soon as my house here sells I will most likely pay the entire mortgage off since I own our place here outright which is one of the reasons I was able to get a mortgage relatively easily on a second home. However I did have to state that I intended to live in the home and not rent it out which is the truth.
 
320Bob said:
Unless you want to permanently move to FL from MN I wouldn't even consider buying a place since there are plenty to rent. I just purchased a home in Scottsdale AZ 3 months ago but our intent is to move there permanently as as soon as our house here in The Chicago area sells. Purchasing a seasonal residence in today's environment makes poor financial sense unless you can rent it out the remainder of the year which would likely be very difficult. I can boat year round in AZ just like FL but in fresh water and on a smaller body of water which is fine for us. I just closed on a 1.875% Libor based interest only mortgage which puts my mortgage payment less than I have on either of my vehicles. I put 30% down but the bank required 25% because the Phoenix area still has declining property values overall but where I bought values are stabilizing if not rising slightly. As soon as my house here sells I will most likely pay the entire mortgage off since I own our place here outright which is one of the reasons I was able to get a mortgage relatively easily on a second home. However I did have to state that I intended to live in the home and not rent it out which is the truth.
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Your renting idea only works if you are not considering the vacation home as an investment and don't care about appreciation. If you care about quality of life, and seeing your assets grow so your kids have something when you are gone then owning is appropriate.......and that doesn't count the years of enjoyment you have with your family in your vacation home.

People told me the same thing when we started looking for beach property in the 80's....."you can rent a lot cheaper".......interest rates were about 12% and beach property wasn't selling. We saved and saved, lived on less than we made and paid cash for our beach house. We've re-decorated it and improved to suit us, had many years of enjoyment with our kids and now we all schedule vacations together and we are still enjoying it with the kids and grandkids. I smile when my tax bill comes every year when I see the appraised value......it is worth about 8X our basis now and was as high as 12X my basis in 2006-7.

So the rent thing doesn't work for me...............
 
Thanks, Fwebster. Key word is 'basis'. Too clarify my position in regard to property is that even if you only have the one, it needs to produce value. Granted, it is hard for it to do that if it exists in a subdivision. In that case the value is held to the whims of the market. Does it have access to parks, public transportation, or ( God help us ) a coffee house? Markets in housing within a specific local and within a subdivision also suffer from too much inventory that suppress a rebound in value. Still though this kind of property can generate value with a simple garden that provides food for the table.

I look for vacant property that I can harvest. I can sit on a property with hardwoods for as long as I see fit but know I have a large return. Granted when I sell it the value has gone down for the purchaser (or not if they want a clear site) and the market price will show that in my account when I convey, but as a good stewart, the purchaser can also harvest the trees in their lifetime. Easiest property to own and profit from.

In a property with a home on it I do look at what I can rent it out for. Hardest property to own and profit from. Non-homestead taxes in Michigan, insurance, vagaries of the tenant, and maintenance all make it tough.

Ok, enough of this. Back to the boat and boat topics on CS.
 
A little update for everyone. I type this from our Hotel in Ft Lauderdale,as we watch the weather with great interest. We looked at several places yesterday and today. We really liked a couple, and one in particular in Pompano Beach. It is definitely improving around here. Our first choice already had 21 showings in the few days it had been on the market, with three set to make offers. Our realtor said she has been so busy, she can't take days off right now as people come from all over the world. So, now we have to decide if we want to move on our first pick, or keep looking and just plan on that one getting away.
 
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