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Closing a Florida Home

Living In Florida Without Losing Your OHIP Coverage

First bit of info is knowing about occupancy.

If you are Canadian you can stay in your Florida home for up to and 1 day less than 6 months without incurring a need for permission from the U.S. authorities and without both tax and health care ramifications in Canada.

One day more than 6 months and you could lose your OHIP benefit if it was discovered you were out of the country. Pretty easy to do when you know that your comings and goings are recorded at the border.

To purchase a Florida property you will need to write an offer and give your deposit money, called earnest money in the U.S. when you cross the border to an escrow agent (usually a lawyer)or a realtor.

They have a legal obligation to hold your deposit until one of 2 things can happen 1/ the seller hands him or her a deed conveying title and a “GUARANTEE” that they in fact do own the property. 2/ The deal falls through, in which case your deposit money comes back to you.

If the lawyer determines you get what you are meant to get then there will be a closing where your money is exchanged for the title and you will get the keys to your property.

So who is making the “GUARANTEE”? In Florida as here in Canada now there are Title Insurance Companies. So your lawyer would supply you with a policy issued by a big well -known insurance companies that have been in business for decades and that are highly solvent. They do research to make sure the seller owns the property and to make sure there are no others claims or liens against the property.

If the title is clear then the lawyer will issue you an insurance policy. There is a clause in this policy that insures the insurance company will pay you the price you paid for the property in the rare occurrence that despite their research the seller did not own the property and that if he did and there was a lien that wasn’t found then the insurance company will pay off the lien. It’s a good system that works well.

If you have heard that property insurance and property taxes in Florida are higher than elsewhere then you are correct. They are higher than states that have income tax and death tax. However, there are ways to reduce some of these costs plus the savings on the purchase cost at the moment should substantially offset these costs, plus of course the lack of other taxes and the generally lower tax brackets that exist in Florida.

If the property insurance costs seems high it is quite simple buy something that was built after 1992 and that is not right on or next to the beach. Property insurance is much more reasonable for these properties as the building codes changed in 1992 and were much improved plus beach front is of course more subject to winds and hurricanes.

Properties built after 1992 perform much better in high winds and this is why they cost less to insure.

Currently as of today’s date property taxes are running about $1600.00 per year for every $100,000 of property value. Taxes are market value assessed yearly. So your taxes will be based initially on your purchase price.

However depending on how you take title if you rent the property then it can be arranged so that your expenses including interest are deducted from your income on the property. That lower net figure will not be taxed by Florida (the state) only by the U.S. Federal government at rates much lower than in Canada.

So it may be time to grab your beach towel and sun block and check out living part of the year under the Florida Sun.

With Canadian real estate at an all time high it is hard for investors to make numbers work on properties here. So if you are an investor this may be a great opportunity for you to build up your portfolio and to buy Florida real estate while enjoying avoiding our Canadian winters.

Closing A Florida Home

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