Home sales in the Coachella Valley rose 22 percent while the median price jumped 19 percent in January, proving the area to be more resilient as sales sputtered across California.
That was all good news compared to the state. California’s 27,858 sales of new and resale homes and condominiums were down 5.4 percent compared to January 2009.
The valley’s median home sales price was $215,000 for all homes and condominiums combined in January. That reflected a 19.4 percent gain compared to the 180,000 in January 2009.
One home in Palm Desert sold for $7.5 million.
In the Coachella Valley, MDA DataQuick reported 748 total sales.
Condominiums led the way, posting 152 percent sales gains in January over the same month last year with 197 sales at the median price of $236,000.
Resale home activity was up nearly 4 percent with 513 sales at a median price of $198,000, according to DataQuick, the nationwide real estate monitoring firm.
New home sales fell 5 percent, with just 38 sales closing escrow that month. The new home sales median was reported to be $259,750, nearly 14 percent less than the median in January 2009.
Greg Berkemer, executive vice president of California Desert Association of Realtors, said sales data collected from Multiple Listing Service sales shows that existing home and condo sales rose by 51 percent from a year ago.
But because the inventory has remained flat for the past three months hovering at 8,100 properties it appears that even with increased sales, a replacement supply of new listings are coming onto the market. The steady supply continues to put downward pressure on pricing, he said.
It suggests that distressed properties and low-cost inland homes, such as those in the Coachella Valley, are grabbing the attention of buyers.
DataQuick reported that 44 percent of the existing homes sold in January in Southern California had been foreclosed on during the past year.
That was up from 40.8 percent in December, but down from 58.2 percent in January a year ago.
Foreclosure resales peaked at 58.8 percent last February.
The January stats underscore just how atypical this market remains. A huge chunk of what’s selling is still distressed,” MDA DataQuick president John Walsh said in a statement.
Investors and first-time buyers continue to dominate many areas, while the move-up market has yet to kick in.
For Riverside County, MDA DataQuick reported a 4.8 percent drop in year-over- year sales, from 3,320 in January 2009 down to 3,162. The median remained at $195,000.
The obtainable value of Palm Springs area real estate is nothing short of amazing. Have a look at our listings on our website for examples (or search the entire desert area MLS from our site).This is especially striking when compared to prices in cities form which people come to this area (Los Angeles, Seattle, Calgary, Minneapolis, etc).
Here’s another in a series of local stories (The Desert Sun) that offer empirical proof that the Palm Springs area real estate market is rebounding. Now is the time to buy and sell homes in the Coachella valley. If you’re waiting for the market to hit bottom…you’ve missed it!
Also have a look at the relevant, important information at the following link: http://bit.ly/bSY6rN (copy and paste to your browser).
We have been on hiatus from posting for the last weeks, not because we wanted to be, but because we needed to step back and consider the larger picture. We didn’t want to blog for the sake of another blog post. Was real estate’s slow recovery really only about the state of the economy? Or was it recognizing that there are overarching issues that affect everything? We consider the following analysis one of our most important blog posts to date.
We are certainly not immune to the vagaries and difficulties of the real estate market – from a business, but particulary personal perspective. Yet we know that there are always opportunities in any scenario. Some people smirk when they learn that our motivation is not selling them real estate, but helping to facilitate their real estate and financial goals (often including lifestyle objectives). You see, we really do understand that people want to be educated and engaged in conversation…not sold. Being consumers first, we empathize with what home buyers and sellers are experiencing. Unlike times past, “selling” is about interacting on a sincerely empathetic level. What is the buyer or seller needing? How can I better understand? How can I add value? We are clearly undergoing a paradigm shift in advertising and marketing. But how do we explain the “new world” to those who adapt slowly? Let’s start by putting all of this in perspective. Marketing creates desire and advertising is a call to action. Keep that in mind as you watch this video:
It’s interesting to see Windermere’s ascendancy to the top of the Coachella Valley brokerages. Afterall, it’s only been relatively few years that the company has been in existence in the Palm springs area. Have a look at the latest comparative sales charts of Palm Springs area Real Estate Brokers:
While Windermere Real Estate understands the significance of technology and provides its staff with cutting edge tools, it is the individual agent who must fully digest the scope and power of even greater technology and put it to use for his/her buyers and sellers. You’ll see in Part 2 of “Does Your Real Estate Agent Suck (Parts 1 & 2)” how important it is not to to get bogged down in a debate about Realtor professionalism when it’s so simple to separate the wheat from the chaff. Connect the dots on the following links and you’ll have some of the “proof of concept” and logic we used for this hypothesis:
So, despite the reaction to posts like “Raising The Bar…” (above), we don’t actually believe that there exists a noteworthy amount of unprofessional Realtors. Rather, we believe that there are many who appear to be ineffective because they are still in the dark ages as concerns their approach to marketing. In our next post we’ll show you why success is all about visionary thinking and the utilization of new technology in the form of social media. We will segue into how essential social media is to buying and selling of real estate. It’s not only the technology, but a grasp of how the game has changed. Indeed how to use the technology. Either one becomes a student and understands and embraces it, or is left behind. “Social Media is not a fad, it’s a fundamental shift in the way we communicate”.
Our goal is to become the #1 expert in the utilization of social media for Palm Springs area real estate. Whether it’s through blogging, life streaming (Posterous) and video (Viddler, Vimeo, You Tube, Meta Cafe), Facebook and Linkedin networking, or micro-blogging through Twitter and its many applications (check out how we are using Listorious and Tweetmeme for example), We’ll show you why this is the future of marketing. And don’t forget to subscribe to this blog and follow us on the various social networking platforms (many of which you can connect with us through retaggr.com) to experience it yourself.
Comment below on how you use social media, what your favorite sites are, and which you’d suggest we focus on as we continue to interact with you.
LocationRancho Las Palmas Resort & Spa
41000 Bob Hope Drive
Rancho Mirage (Palm Springs), CA
92270
Contact InformationKathy Bayer
Phone: 800-678-5007 Contact via Email
You may already know how complicated owning property or investing in the U.S. can be. However, you may not know how to title your property correctly or which U.S. investments Canadians can make that are exempt from U.S. income tax. Keats, Connelly and Associates would like to invite you to attend one of our Cross-Border Living Workshops where we will provide answers to these questions.
Experienced professionals from Keats, Connelly and Associates, including Robert Keats, author of a Canadian bestseller entitled The Border Guide, will conduct the workshops.
We will provide you with strategies on how to:
best work with the Canadian and U.S. tax systems;
buy a retirement home and deduct mortgage interest from your Canadian return;
take advantage of Canadian/U.S. dollar exchange rates;
receive your Canadian RRSPs tax-free or nearly tax-free in the U.S.;
find investments exempt from U.S. income taxes and withholdings; and
maximize Medicare benefits.
A general question and answer session will follow the presentation to address your specific concerns.
The registration fee is US$125 per person (or US$175 for married couples). It includes a continental breakfast, lunch, as well as all workshop materials. Advance registration is required and space is limited, so make your plans early! Visa, American Express, and MasterCard are accepted.
Workshop hours are from 8:00 am to 12:00 noon. The continental breakfast and workshop registration begin at 7:30am. Lunch will be served at 12:15pm. During lunch, KCA professionals will be seated among you to answer further questions.
If you or someone you know would like to attend, please contact us at (800) 678-5007.
I am looking forward to meeting and assisting the Canadian workshop attendees with Palm Springs area real estate. Please look for me (will be wearing my Windermere Real Estate/Stephen C. Love name tag). Otherwise, our email address is love@palmspringsgreathomes.com and our website at www.palmspringsgreathomes.com has complete contact information.
Here’s another episode of “Love of the Desert TV” ’s Featured Properties. This is a spectacular golf course property in the prestigious development of Legacy at Mission Hills Country Club, Rancho Mirage, CA. It is truly an opportunity to make a deal with a motivated seller. Seller financing may also be available. See the complete listing and others at www.palmspringsgreathomes.com.
Those of you who know me know that I am an exercise evangelist. I’ve long seen exercise as a metaphor for the focus and determination we need to maintain in order to accomplish any goal. So it was interesting to me to see well-known author, Harvey Mackay, dedicate one of his weekly columns to the subject.
The very same attributes that are needed to compete and succeed as an athlete make up the foundation of a very successful Realtor. In fact, it is easy to see the metaphor that we use as we compare our sometimes Herculean efforts in real estate to the focus and determination required in goal-oriented athletics.
I am following Mr. Mackay’s advice with some additional thoughts for the more advanced athletes out there.
Exercise Your Body To Keep Your Brain In Shape
Gen. David Petraeus has a clear view of leadership, as Maj. John Patrick Gallagher recounts in the book Leadership Lessons of the White House Fellows, by Charles Garcia. One day when Petraeus was a colonel in the 82nd Airborne Division, he asked his soldiers to name the #1 leadership priority of the brigade.
Integrity? Marksmanship? No, the correct answer turned out to be physical fitness. The brigade thought Petraeus was joking, until the colonel began leading his soldiers through an intensive 75-minute exercise drill every morning. And soon his point became clear: The workouts drove the brigade to greater alertness and energy, as well as more pride in themselves and their unit.
As Gallagher puts it, “Self-discipline and being able to perform under pressure and exist outside our comfort zone would be the key that unlocked our success.”
The word exercise derives from a Latin root that means “to maintain, to keep, to ward off.” To me, that means I should exercise to maintain my health, to keep my sanity and to ward off the temptations that lead me down unhealthy paths. I spend at least 60 minutes a day walking, jogging, swimming or lifting weights.
What we consider “exercise” today is really a natural part of life, but in our current world, we have to make a conscious effort to make it part of our daily routine. Just a few generations ago, walking was a major form of transportation! Our evolution from hunters and gatherers, who walked to get from one area to another, to a sedentary automobile/train/plane civilization, has forced us to look at exercise in a different way.
According to the Franklin Institute, “walking is especially good for your brain, because it increases blood circulation and the oxygen and glucose that reach your brain. Walking is not strenuous, so your leg muscles don’t take up extra oxygen and glucose like they do during other forms of exercise. As you walk, you effectively oxygenate your brain.” The research suggests this is why walking can “clear your head” and help you to think better.
So maybe a walking club at lunchtime would be a good place to start.
With a new year upon us, one of the resolutions many people at least think about is getting in shape. That’s a great goal, and I hope it lasts beyond January 2. If you aren’t active already, I encourage you to start now. You’ll feel better and think better as a result.
Exercise is an important element of good health, but you’ve got to approach it with good judgment. Follow this basic advice for getting in shape safely:
·Start slowly. If you haven’t exercised in a while, don’t jump into a strenuous routine. Consult with your doctor to find out what’s safe. Start each workout with a warm-up to ease your body into the session.
·Get the right equipment. Running in the wrong shoes or biking without a helmet can be dangerous. Don’t take chances with old or used equipment. If you’re not sure what you need, ask a trainer or someone with experience.
·Wear suitable clothing. Loose, comfortable clothing is essential. Wear fabrics that absorb sweat, so your body doesn’t overheat. If you’re exercising outdoors in cold weather, wear a warm hat and gloves; in hot weather, wear a cap to stay cool.
·Watch the weather. Don’t go outside to work out in extreme temperatures. I’ve slipped more than a few times on ice in Minnesota. Wear sunscreen, winter or summer. In cold weather, dress in layers. During the summer months, exercise in the morning or late in the day to avoid excessive heat.
·Drink plenty of water. Keeping hydrated is important before, during, and after exercise. Take a drink every 20 minutes, even if you don’t feel thirsty.
·Pay attention to surroundings. When you’re outdoors, don’t “zone out.” Watch out for traffic, other people, rough surfaces and other dangers. Even in the gym, keep your eyes open and your mind engaged to prevent accidents with equip¬ment or other exercisers.
·Listen to the warning signs. Don’t try to “work through” pain. Slow down if you get short of breath. If you get dizzy or feel nauseated, or feel pain in your chest, neck, shoulders, or arms, stop exercising immediately. If the symptoms don’t go away, call your doctor.
Mackay’s Moral: Taking care of business starts with taking care of yourself.
Reprinted with permission from nationally syndicated columnist Harvey Mackay, author of the New York Times #1 bestseller “Swim With The Sharks Without Being Eaten Alive.”
What Makes A Champion?
Anatomy of a Winning Mindset
What makes an elite athlete succeed in sports will make a “regular” person succeed in life. What has been learned from studying gold medalists? The answer, from all sports psychologists, was six factors that apply to all of us:
Self-Analysis: The successful athlete knows his or her strength and weaknesses. This critical appraisal should be honest but never negative. A negative self-analysis decreases your motivation and doesn’t offer solutions.
Self Competition: When an event ends, a champion doesn’t ask herself, “Did I win?”, she asks herself, “How did I do?”. You can only control your performance. It doesn’t make sense to compare yourself to others. Winning or losing becomes secondary and at times irrelevant.
Focus: The athlete must always be “in the present”, concentrating on the task at hand, not on the outcome. If you regret the past or worry about the future, it inhibits your performance.
Confidence: Successful athletes control anxiety by setting tough, but reasonable, goals. By facing a challenge where the outcome is within your ability, you achieve a state of “flow” which increases your confidence.
Toughness: This is a mental trait which involves accepting risk and trying to win, rather than trying not to lose. A “tough” athlete accepts commitment, sees a change as opportunity and believes in control of his or her destiny.
Having a Game Plan: Even for elite athletes, talent is not enough.They need a game plan. Your own game plan for living can be simple or complex, depending on the level of your ability and experience.
Beginning with this post, we are now utilizing polling and surveys (via www.polldaddy.com and others) to solicit your thoughts about the substance of what we bring you. Today we’re looking for a consensus about whether we are resonating with you as to the opportunity that exists in Palm Springs area real estate. In addition to your subscription to this blog and your interaction on our website, these are very effective gauges of what you, our readers, are thinking and what information you’d like.
The first 100 responses to the poll below will receive a comprehensive overview about Palm Springs area real estate and will receive a specific individual search per your parameters. (price, HOA, building style, square footage, lot size, year built, style, gated community, golf community, etc).
This is one of several 2010 Economic Forecasts that we will bring you over the next few weeks in an effort to provide balanced perspective about what to expect in the housing market. Diane C. Swonk is Mesirow Financial’s Chief Economist & Senior Managing Director. Keep in mind that this is a broad national view of the overall economy. As you’ll soon see, our local forecasts expound upon this and provide even more reasons for optimism for the real estate market in the Palm Springs area.
I found Harvey Mackay’s column “Negotiating in a Nutshell” very relevant to today’s real estate market and have excerpted it below. Whether you’re a home buyer or seller, it is a good time to think about how to take advantage of the market conditions before they inevitably change. I’ve followed Mr. Mackay’s advice with some very compelling reasons to react to the opportunities currently available. By most accounts, we are at or near the bottom of the market. If there remains a 5-10% question mark, the solution is to negotiate.
As you’ll be reminded by reviewing our statistically laden blogpost of November 14th (http://lovepalmspringshomes.com/?p=725),the Coachella Valley is a particularly strong value and is demonstrating renewed strength. Visit http://www.palmspringsgreathomes.com to find some truly great properties and to search the entire Palm Springs area MLS.
It strikes me as ludicrous to consider current conditions detrimental to the seller, especially if that seller is also a buyer. Needless to say, any financial compromise incurred on a sale will likely be recovered on the buy. Everyone should consider: (1) The inventory of existing homes for sale in the Coachella Valley is the lowest since December 2005 as home sales rose 1.2 percent in September over September 2008, per reporting by the California Desert Association of REALTORS in early November. (2) Interest rates are at a 38 year low, according to Freddie Mac’s weekly survey of conforming mortgage rates (4.81% on a 30 year fixed-rate and 4.32% on 15 year fixed-rate loans). (3) The expanded tax credit goes away on June 30th, 2010. (4) The FHA is considering revising its criteria, which would make qualifying slightly more challenging for some borrowers.
The only way to know that a market has hit rock bottom is when you look back after its rebounded. We are in that rebound now. If you’re still not convinced, you will be able to proceed with confidence once you digest the facts and utilize them with these negotiating skills outlined by Mr. Mackay:
Never accept any proposal immediately, no matter how good it sounds.
Never negotiate with yourself. You’ll furnish the other side with ammunition they might never have gotten themselves. Don’t raise a bid or lower an offer without first getting a response.
Here are some more rules of the road:
3. Never cut a deal with someone who has to “go back and get the boss’ approval.” That gives the other side two bites of the apple to your one. They can take any deal you are willing to make and renegotiate it.
4. If you can’t say yes, it’s no. Just because a deal can be done, doesn’t mean it should be done. No one ever went broke saying “no” too often.
5. Just because it may look nonnegotiable, doesn’t mean it is. Take that beautifully printed “standard contract” you’ve just been handed. Many a smart negotiator has been able to name a term and gets away with it by making it appear to be chiseled in granite, when they will deal if their bluff is called.
6. Do your homework before you deal. Learn as much as you can about the other side. Instincts are no match for information.
7. Rehearse. Practice. Get someone to play the other side. Then switch roles. Instincts are no match for preparation.
8. Beware the late dealer. Feigning indifference or casually disregarding timetables is often just a negotiator’s way of trying to make you believe he/she doesn’t care if you make the deal or not.
9. Be nice, but if you can’t be nice, go away and let someone else do the deal. You’ll blow it.
10. A deal can always be made when both parties see their own benefit in making it.
11. A dream is a bargain no matter what you pay for it. Set the scene. Tell the tale. Generate excitement. Help the other side visualize the benefits, and they’ll sell themselves.
12. Don’t discuss your business where it can be overheard by others. Almost as many deals have gone down in elevators as elevators have gone down.
13. Watch the game films. Top players in any game, including negotiating, debrief themselves immediately after every major session. They always keep a book on themselves and the other side.
14. No one is going to show you their hole card. You have to figure out what they really want. Clue: Since the given reason is never the real reason, you can eliminate the given reason.
15. Always let the other side talk first. Their first offer could surprise you and be better than you ever expected. *
Keep This in Mind & Make Money in 2010
Following three years of declining home prices, the end of the nationwide housing slump may be in sight. Home sales consistently have been rising, the surplus of houses is shrinking, and most economists believe home values nationwide will hit bottom in the second half of 2010—but not before declining an additional five to 10 percent. That’s good news for homeowners hoping to sell or rebuild lost equity.
Mortgage rates currently are below 5 percent, and should remain low for the next few months, partially due to the Federal Reserve’s ongoing purchase of mortgage-backed securities. However, if the economy quickly turns around and inflation fears resurface, rates could rise to as high as 6.5 percent, slowing demand and pushing down home values.
The market may remain tilted in favor of buyers over the next year, but that power gradually will be reduced as conditions in the housing market continue to improve.
Buyers hoping to purchase or invest in a lower-priced, entry-level home should expect some competition from investors and other buyers. To remain competitive, buyers are advised to put down as much cash as possible, as many investors are offering to make all-cash deals. Another factor to keep in mind is that offers below listing price often are outbid by others.
Some home sellers are postponing listing their homes until the market recovers. However, timing the market is difficult, so homeowners thinking of selling should carefully weigh their options. Congress recently expanded the federal tax credit to include some existing homeowners, but they must close before June 30, 2010 to qualify. Although existing homeowners are not required to sell their current home to qualify for the credit, those who plan to rent out their current residences should be aware that many lenders require borrowers to show they are financially capable of paying two mortgages, or show rental income for at least six months. **
New $6,500 Federal Tax Credit for “Move-up” Home Buyers May Benefit You
The federal government recently extended and expanded the federal tax credit for home buyers. The tax credit now concludes June 30, 2010 instead of Nov. 30, 2009, and also includes existing homeowners who meet certain qualifications.
Current homeowners are eligible for a $6,500 federal tax credit if they have lived in their current home for a consecutive five out of the last eight years, and the adjusted household income does not exceed $125,000 for single files or $225,000 for join filers.
The expanded tax credit went into effect Nov. 6, the day President Obama signed the bill. Homes that close escrow between Nov. 6, 2009 and June 30, 2010 are eligible to apply for the tax credit.
The legislation does not require homeowners to sell their current residence; however, the new home must be the primary residence and the price of the home must not exceed the limit of $800,000. Homeowners who plan to retain their current home as a rental or second home are advised to move into the new home the day escrow closes so there is no question it was the principal residence at the time of the tax credit.
Almost all housing types are eligible, including new and existing single-family homes, condominiums, manufactured or mobile homes, and boats that serve as the owner’s principal residence. Second homes and investment properties are not eligible.
Home buyers in 2009—those who close after Nov. 6, but no later than Dec. 31, can claim the $6,500 credit on their 2009 federal tax returns, or amend their 2008 returns. Similarly, eligible buyers in 2010 will be able to file for the credit on their 2009 returns or 2010 returns. All home buyers should talk to a tax advisor regarding timing decisions. **
Proposed changes to FHA
Testifying before the Housing Financial Services Committee the week of December 7th, 2010, Secretary of Housing and Urban Development (HUD) Shaun Donovan announced possible policy changes for Federal Housing Administration’s (FHA) borrowers.
Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels. FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.
Proposed changes include:
· Raising the minimum credit scores requirements: Currently borrowers with FICO scores as low as 500 may qualify for an FHA-insured loan. The new minimum credit score has yet to be determined.
· Increasing down payment requirements: FHA borrowers currently can put down as little as 3.5 percent. A proposed change would raise that amount to a minimum of 5 percent.
· Limiting the amount sellers can provide as concessions: The agency is considering lowering the maximum permissible level to 3 percent from its current 6 percent limit.
· Raising up-front insurance premiums: Agency staff is reviewing whether to increase the monthly insurance premiums charged to borrowers, which come on top of insurance paid up front. The current up-front premium is set at 1.75 percent of the value of the loan. The FHA may decide to increase that premium. The amount has yet to be determined.
According to Donovan, the rules will not be finalized until the FHA determines how to craft them in a way that weeds out the most problematic borrowers while ensuring that qualified borrowers will not be inadvertently shut out, thereby derailing the housing market’s recovery.
*Reprinted with permission from nationally syndicated columnist Harvey Mackay, author of the New York Times #1 bestseller “Swim With The Sharks Without Being Eaten Alive.”
**California Association of Realtors, including summaries of articles by Amanda Gengler, CNN Money magazine, November 14, 2009 and by Kenneth R. Harney, Los Angeles Times, November 15, 2009
The California Desert Association of Realtors hosted its annual California Real Estate Market Forecast event at the Hyatt Grand Champions Resort in Indian Wells on October 22, 2009. The 2010 forecast was again presented by C.A.R. Vice President and Chief Economist, Leslie Appleton-Young, and Patrick Veling, Presdent Real Data Strategies.
Everyone seems to have an opinion about the market and economy. This is valuable empirical data for anyone considering real estate in the Palm Springs area. Now is the time to pull the trigger.
The Palm Springs California area (the Coachella Valley, mainly consisting of Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, Bermuda Dunes, La Quinta and Indio), is a very popular second home destination for Canadians. Our resort lifestyle and weather is a major attraction for people looking to escape the harsh winter of their primary residences. The Palm Springs area is recognized as the golf capitol of the world and also offers a large menu of recreational and entertainment and an immense calendar of social events amidst some of the world’s most beautiful natural topography.
With the economy having impacted our housing market similarly to most other locations, there are some eye-popping deals to be had right now. Add to this that the value of the Canadian dollar (Loonie) is essentially on par with the US dollar, and we have a perfect time for Canadians to purchase second homes here.
Owning Real Estate in America (A Primer)
Types of ownership
• Individual Names (JTWROS, CPWROS, CP, etc.)
– Joint Tenancy and Community Property are easy but potentially subject to US estate tax and probate (talked about later)
– Tenancy by the Entirety is preferred in FL
– Use beneficiary deeds
• Canadian Corporation
– Very common for Canadians
– Avoids US estate tax
– Subject to double taxation
– Required to file non-resident corporate tax return, Form 1120F
– Fair market rent should be paid to the corporation
– Do not use
• Canadian Trust – Commonly suggested for Canadians
– Avoids US estate tax
– Subject to 21 year rule
– Causes double taxation
– Do not use
• Living Trusts – Nothing similar in Canada
– Not needed for non-residents, probate can be avoided with beneficiary deeds
• Cross Border Revocable Living Trust™ – For expensive personal residences (>$750k)
– Avoids probate
– Protection from creditors
– Developed by a cross-border attorney
• Limited Liability Company (LLC) – Not recognized in Canada
– Subject to double taxation
– Do not use
• Limited Liability Partnership (LLP) – Allows for the limited liability
– Recognized in Canada
– Use when property will be used for business purposes, e.g. rental
– Use LLLP if other than couples are the partners
US Estate Tax
General Rule
• $60,000 exemption for non-resident aliens (NRAs), per person
• Unlimited marital deduction is not allowed for non-citizens
• US taxable estate is net of US debt
• Note – Canadian debt will not reduce US estate
• US/Canada Treaty allows for pro-rata estate tax credit
– Equal to Applicable Exclusion Amount ($3,500,000 in 2009), multiplied by the fraction of US assets to worldwide assets, but not to exceed the amount of US tax
– Taxpayer is required to report worldwide assets
Rental RE Owned by NRAs • Default 30% withholding on GROSS rents
• Election can be made to withhold on the NET rents
• Depreciation must be taken – Canada does not require
• Will need to file Form 1040NR by June 15th
FIRPTA • Foreign Investment in Real Property Tax Act of 1980
– If buyer purchases home for less than $300,000 AND intends to occupy the property, withholding is not required on the sales proceeds
– Otherwise, FIRPTA requires 10% withholding on the gross proceeds
– Unless, Form 8288B is filed, then 10% withholding on the “adjusted gain.”
• W-7 – Application for IRS Individual Taxpayer Identification Number (ITIN) should be filed with 8288B
• Canadians do not have the option of deferring taxes in a tax-free exchange or in an installment sale!
*Information provided by Dale Walters, CPA, CFP® (US & Canada) Keats, Connelly and Associates, LLC
and Cross Border Tax & Accounting, LLC
