Canadian considering Florida vacation rental purchase

Buying real estate in Florida by Canadians is tricky, since full-time residents are treated differently than vacationers, according to the Canadian Snowbird Association. Seasonal residents pay more tax on the same property than a resident. Florida's new Homestead Act and "Save our Homes" recent amendment gives permanent residents of Florida the first $25,000 of the assessed value of their home tax free and caps the rest of their property tax at 3 per cent. That advantage isn't conferred upon visitors - who end up paying much of the difference. Example: A Canadian snowbird buys a house and pays $4,800 tax, while his next door neighbour, a Florida resident is charged only $1,800.

Property tax costs on vacation properties are escalating, which snowbirds need to be aware of. You are not necessarily inheriting the tax bill from the previous owner (resident) when you are looking at an assessment notice. Another downside to buying a home in Florida is finding home insurance, vital in a state frequently hit by natural disasters. Vacation home owners are also not eligible for government aid in the event of a disaster like Hurricane Katrina.

As far as tax issues go...the US and Canada do have a tax treaty, which means whatever taxes you will be paying there, you can deduct from taxes you pay here. However there are other state by state issues (e.g., in California you must declare world income), you must file annual income tax statements and you should get independent accounting advice....before you buy.

(prepared by Ozzie Jurock/Vancouver Sun)