Can Canadians buy property in the USA? [2023] 

Yes! Canadians are not only eligible to buy real estate in the US without any legal restrictions, but they are also actively participating in the market. In 2023, Canadians made a remarkable investment of approximately $6.6 billion in US real estate, accounting for around 8,500 existing-home purchases (Source: NAR)

---

Are you a Canadian considering buying a vacation home, primary residence, or an investment property in the USA? You’re part of a growing trend among Canadians buying property in the USA. In 2023, nearly half (49%) of Canadian buyers bought vacation homes in the US, while others invested in primary residences and dual-purpose properties (vacation and rental properties). (Source: National Association of Realtors)   

This trend underscores the allure of US real estate for Canadians, driven by attractive prices, potential for appreciation, and the appeal of warmer climates.  

Despite its popularity, potential buyers often feel uncertain due to unfamiliarity with the US market and its buying process. 

Through my years of experience in assisting Canadian citizens and other foreign nationals with US property purchases, I’ve encountered many common concerns and questions. This experience has equipped me with a deep understanding of the nuances involved in this process. 

I have utilized my extensive knowledge of cross-border real estate to create a concise guide that will help diverse Canadian buyers navigate the US property market and simplify how can Canadians buy property in the USA.

This guide will be useful for snowbirds who are looking to purchase a vacation or a second home in the US, non-US resident real estate investors searching for the perfect investment property in the US, or those who are relocating to the US from Canada for work or study on a TN visa or other work or student visa.

Depending upon your unique situation, this guide will streamline the process of searching for a vacation home, investment property or primary residence. 

Let’s start by analyzing trends in Canadians buying US real estate and how it’s shaping.

How much US real estate is purchased by Canadians every year? 

The US real estate market consistently attracts significant investment from Canadian nationals each year. According to the National Association of Realtors (NAR), from April 2022 to March 2023, Canada ranked as the third-largest source of foreign real estate buyers in the US, accounting for 10% of all foreign buyer purchases in terms of the number of existing home units sold. 

In this period, Canadians purchased 8,500 existing home units in the US, totaling $6.6 billion. While this figure represents a 25% decrease in the number of units from the previous year (11,300 units), the increase in total dollar volume to $6.6 billion from $5.5 billion suggests a trend toward buying more expensive properties. 

When this data is placed in the context of historical trends, it becomes evident that foreign investment in the US real estate market is gradually recovering from the impacts of COVID-19. Additionally, the current high mortgage rates in the US are playing a role in modulating the pace of investment. These factors combined suggest a cautious yet steady resurgence in interest from Canadian investors 

Below is the table for the historical trends in dollar volume and the number of existing home purchases by Canadian nationals in US real estate: 

Now that we’ve explored the trends, let’s delve into the eligibility criteria to help you confidently proceed with your own property purchase in the US. 

What are the eligibility criteria for Canadian buying property in the USA? 

Contrary to what some might assume, there are no additional rules or specific eligibility criteria for Canadians or any other foreign nationals when it comes to purchasing real estate property in the US. The US government does not impose any restrictions or rules on foreign buyers, meaning the buying process, tax implications, and homeownership rights are the same for Canadians as they are for US citizens. 

To further facilitate the process for foreign buyers, HomeAbroad offers specialized loan programs called foreign national mortgages for Canadians without a US credit history. This is especially helpful for newcomers on TN or other work visas, snowbirds, or non-resident Canadian investors who may not have established credit in the US but are interested in financing a US property.

Additionally, these specialized loan programs cater to TN visas or green card holders with an established credit history in the US. 

Moreover, Canadian investors don’t need a visa to enter the USA, which simplifies travel to the US. This is a significant advantage for investors and snowbirds looking to buy an investment property or vacation home and manage from Canada.

In addition, the tax treaty between the US and Canada prevents double taxation, further enhancing the financial feasibility of cross-border real estate investments. 

In conclusion, the primary requirement for Canadians wishing to buy property in the US is financial readiness, whether that means having the resources to pay in cash or to make a down payment for a US mortgage. With no additional legal barriers in place, Canadians are well-positioned to explore real estate opportunities in the United States. 

Let’s move on to the steps involved in buying property in the US as a Canadian. 

How can Canadians buy property in the USA? 

While the US home buying process is similar to that in Canada, there are nuances that Canadian buyers need to be aware of. Below, we outline the key steps in the process, providing a roadmap for a successful purchase of a primary residence, vacation home, or an investment property in the US. For a more detailed explanation of each step, refer to our comprehensive guide on foreigners buying property in the USA. 

Step 1: Decide where you want to buy the house in the USA  

Whether you’re seeking a warm vacation home as a snowbird, a strategic investment location, or a convenient area as a TN visa holder or student, your choice of location is crucial. Assess the factors that align with your property goals and personal preferences to find the ideal property.  

Step 2: Find a real estate agent experienced in international real estate transactions  

In the US, there are real estate agents with international expertise who have obtained a special designation from the National Association of Realtors (NAR) known as Certified International Property Specialists (CIPS).

These professionals have undergone rigorous training in working with foreign national clients, including Canadians, gaining deep insights into international real estate transactions and the specific needs of foreign buyers. This ensures a smooth cross-border international real estate transaction.  

CIPS agents provide invaluable assistance throughout the buying process, from handling paperwork and conducting due diligence to negotiating effectively on your behalf. 

However, it’s important to note that not every real estate agent holds this specialized CIPS designation, and finding a qualified CIPS agent can sometimes be a challenge. 

At HomeAbroad, we recognize the importance of expert guidance in these cross-border transactions. We have a network of CIPS agents and can help you find an agent in the area you’re interested in. Leveraging their local market knowledge and familiarity with regional laws, they can help you find and purchase the perfect property in the US. 

Step 3: Explore mortgage financing options available in the US for Canadians  

As a Canadian, you have access to specialized US mortgage options designed for Canadian real estate buyers. Refer to the upcoming section on US mortgage options for Canadians to understand the available loan programs.  

Step 4: Begin your property search  

Communicate your preferences to your CIPS agent to receive tailored property listings. This targeted approach helps you find a property that meets your specific requirements.  

Step 5: Make an offer on the property you choose  

Once you’ve selected a property, your CIPS agent will assist you in making a formal offer to the seller. This step is critical in the buying process and requires careful consideration of the offer terms.  

Step 6: Commit to your purchase with a formal contract  

Signing the purchase contract is a significant step. This contract includes the terms, conditions, and contingencies that protect you as a buyer. At this stage, you’ll also pay an earnest money deposit to demonstrate your commitment.  

Step 7: Ensure security with a comprehensive title report  

Obtain a comprehensive title report to ensure the property is free of legal encumbrances or ownership disputes. This step is crucial for safeguarding your investment.  

Step 8: Conduct a thorough home inspection and due diligence  

Conduct thorough inspections to verify the structural integrity of the property and ensure compliance with zoning laws. Discovering issues during this phase allows you to renegotiate the price or request repairs.  

Step 9: Finalizing your property purchase in the USA  

Finalize your purchase by closing on your mortgage and completing the necessary property ownership paperwork. This culminating step officially makes you a Canadian owner of a US property, a significant achievement. 

---

Congratulations!  

Are you ready to implement this process? 

HomeAbroad can make the entire process easier for you. We offer CIPS agent services and foreign national mortgage programs to help you navigate the US real estate market, find the perfect property, and finance it with utmost ease. 

Success Story:

US mortgages for Canadians buying property in the USA 

In 2023, while 51% of Canadian real estate buyers opted for all-cash purchases, the remainder utilized financing options, indicating the availability and accessibility of financing options for cross-border real estate transactions. (Source: National Association of Realtors)   

Contrary to the common belief that a US-established credit score (also known as FICO score) is necessary for a mortgage, there are foreign national mortgage programs available for different groups of Canadian real estate buyers in the US. These include expats on green cards or TN visas with established credit, US newcomers, snowbirds, and non-resident Canadian investors with either no or thin US credit history. 

HomeAbroad provides specialized foreign national mortgage programs that cater to all these groups of Canadians buying properties in the US. 

One popular foreign national mortgage program is the “Full Documentation loan”, which requires verification of personal income, assets, and employment, along with an international credit report. Canadian real estate buyers comprising US newcomers on TN visas, snowbirds, and non-resident investors can use this foreign national mortgage program to buy primary residences, vacation homes, and investment properties with no/thin US credit history, utilizing your credit history from Canada. 

Another option, specifically for Canadian real estate investors, is the DSCR loan. The Debt Service Coverage Ratio (DSCR) loan evaluates a property’s income potential against its mortgage payments and operational expenses. In real estate lending, the DSCR is calculated as the ratio of the property’s gross rental income to its PITIA (Principal, Interest, Taxes, Insurance, and HOA fees, if applicable). A DSCR ratio of 1 or higher is required to qualify, where a ratio of 1 indicates that the property’s income matches its expenses, and a higher ratio signifies a surplus. Snowbirds can use this loan to buy a vacation home as well if you plan to use the property for rental as well. 

For a more in-depth understanding of DSCR loans and how Canadians can qualify for them, refer to our detailed DSCR loan guide. 

Lastly, Canadians who are in the US on a TN visa and have established a US credit history may opt for mortgage programs with HomeAbroad, designed specifically for working professionals and green card holders from Canada with established US credit.  

If you are interested in getting a foreign national mortgage, HomeAbroad can provide you with the best loan program to suit your unique needs with competitive terms.

What are the tax implications for Canadians buying property in the USA?

Understanding the tax implications is crucial for Canadians buying property in the US. Generally, foreign nationals, including Canadians, have the same tax implications as US citizens, with no additional taxes imposed specifically for being a foreign buyer. 

Taxes for all Canadian property buyers: 

Regardless of nationality or the intended use of the property, all property owners must pay property tax. The tax rate is consistent with what US citizens pay in the same state, though rates can vary from state to state. 

Taxes for Canadian investment property buyers: 

Owning a property that generates rental income, such as an investment property or vacation home rented out when not in use, entails paying income tax on that income at rates equivalent to those for US citizens. Notably, the appreciation of property value is not taxed until its sale. 

Under the US-Canada tax treaty, Canadian property owners can receive a tax credit for taxes paid in the US, which can be claimed while filing taxes on their US property income in Canada, preventing double taxation. 

FIRPTA (Foreign Investment in Real Property Tax Act) 

Under FIRPTA (Foreign Investment in Real Property Tax Act), when a non-resident foreigner sells US real estate, a portion of the sale proceeds (usually 10%-15%) must be withheld by the buyer at closing and remitted to the IRS. This isn’t an additional tax but a prepayment towards any potential capital gains tax liability. Foreign buyers will be entitled to a refund based on the actual capital gain tax rate (same as US citizens) when they file their tax returns.   

Note that foreign nationals with legal US residency, such as TN or H1B visa holders, are exempt from FIRPTA withholding. Additionally, buyers who intend to use the property as their residence and have a gross sales price of $300K or less are also exempt from FIRPTA. 

Eligibility for Deductions: 

Just as with US citizens, Canadians are eligible for tax deductions on their property in the US. For both personal and investment properties, you can claim deductions on mortgage interest payments. 

When it comes to investment properties, the scope for deductions expands. You are entitled to deductions not only on mortgage interest but also on property depreciation, which can significantly reduce your taxable income. Additionally, costs incurred for repairs, improvements, and other management expenses related to the upkeep of the property are deductible. 

This array of deductions can make investment in US real estate financially attractive for Canadians, providing opportunities to maximize returns while minimizing tax liabilities. 

---

With a clear understanding of the tax landscape for Canadians purchasing property in the US, let’s now delve into the specific trends and insights. 

What is the median and average purchase price of US properties bought by Canadians? 

From April 2022 to March 2023, the real estate market saw a significant uptick in Canadian investment. The median purchase price for properties acquired by Canadians was $572,900, and the average stood at $779,300. This marks a considerable increase, with the median price up by 37% and the average price by 60% from the previous year, indicating a growing interest in higher-value properties. (Source: National Association of Realtors (NAR))   

Where do Canadians buy property in the USA? 

According to the NAR, Florida remains the top choice for Canadians, with 55% of all transactions occurring there. Arizona followed with 14%, while California, Louisiana, and Montana each accounted for 4%. This data reveals a diverse range of preferences, with 36% of Canadians opting for suburban or resort areas, 27% for urban/central city areas, and 11% for small town/rural areas. 

How do Canadians intend to use their US property? 

The North American Free Trade Agreement (NAFTA) offers Canadians the flexibility to stay in the US for up to six months within a 12-month period, influencing how they use their US properties. A notable 67% of Canadian buyers purchased properties for vacation, rental purposes, or both. Meanwhile, 29% bought homes for primary residence. (Source: National Association of Realtors)   

This trend showcases the diverse intentions of Canadian investors in the US market. Whether for personal enjoyment or as a financial venture, opportunities abound for Canadians to own and profit from US real estate. From leasing properties on long-term rental agreements to utilizing American homes as both vacation retreats and income-generating rentals, the range of investment options available caters to diverse strategies and preferences. 

Frequently Asked Questions (FAQs)