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Thinking of Selling Your U.S. Home? Consider These 5 Questions First

By Diane Amato

Published December 15, 2022 • 4 Min Read

It’s been just over a year that the U.S. has allowed fully vaccinated Canadians to enter the U.S. for non-essential purposes and only a few months since travellers to the U.S. no longer had to show a negative COVID-19 test to enter.

The travel numbers between Canada and the U.S. reveal the impact of the pandemic and the ensuing restrictions: In 2021, Canadians took 2.4 million trips to the U.S. compared to over 27 million trips in 2019. While travel from Canada to the U.S. has grown in the first half of 2022, the amount of trips still hasn’t returned to pre-pandemic levels, coming in at less than 50% over the same period in 2019.

If you haven’t used your U.S. property because of the pandemic, are you wondering if now the right time to sell? RBC Bank’s Alain Forget chats with Kathy Buckworth during a recent episode of Go-To Grandma to discuss the options for Canadians who own U.S. real estate.

While selling your U.S. home is certainly an option, Forget offers a few questions to consider before making that decision.

1. Where will you go next winter?

Whether you’ve been a snowbird for some time or are new to spending your winters south of the border, you may not be ready to give up your cross-border lifestyle. If you sell your U.S. property, you’ll want to find somewhere else to go.

2. How much equity do you have in your home?

“In some markets, U.S. real estate went up over 20% in the last year or so,” says Forget. “Canadians should understand the value of their U.S. home as a way of leveraging some of their equity,” he adds.

While selling your U.S. home might be a lucrative move, pulling that equity out in the form of a Home Equity Line of Credit would offer liquidity in U.S. funds. “That’s liquidity without the 30% exchange rate available to you,” says Forget.

3. What shape is your home in?

During the pandemic, most Canadians did not visit their U.S. property, which means many homes did not receive regular maintenance over an extended period.

“Many Canadian property owners are realizing their homes need upgrades,” says Forget. If you’re considering selling, consider the fact that you may need to spend some time and money on repairs and updates before you put your home on the market.

4. Can you refinance?

“Many Canadians have built up equity over time in their U.S. property,” says Forget. “Especially if they purchased 10 years ago when the Canadian dollar and U.S. dollar were at par. This is a timely opportunity to consider refinancing, particularly because interest rates are still historically low — and they won’t stay that way for long.”

Forget offers a few options for property owners, including the option to refinance and lock in a rate for a term of three to ten years as a cash-out mortgage, then use the funds to renovate or cover U.S. bills and expenses. “It’s very beneficial to have U.S. cash on hand without the concern for fluctuating foreign exchange costs,” says Forget.

5. Are you aware of your U.S. tax1 obligations?

In the U.S., like in Canada, if you sell your home for more than you paid for it, you’re required to pay tax on the difference, minus some expenses — known as capital gains tax.

And even as a Canadian resident, your tax obligation falls to the U.S. government first.

If you have owned your property for at least a year, you will be subject to long-term capital gains tax at one of the following rates (as of 2022):

  • 0% if you’re a single taxpayer with a taxable income of less than $39,376

  • 15% if you’re a single filer with taxable income less than $434,551

  • 20% if you’re a single filer with a taxable income of more than $434,551

  • Capital gains are taxed like ordinary income earned in the U.S. if you owned your property for less than a year.

Woman typing on laptop with credit card in hand

Thinking About Selling Your U.S. Property?

Whether you’re still working and need a better savings strategy or you’re retired and want to fine-tune an existing plan, take a step in the right direction today.

Have a listen to Take 5 With RBC at the 16:20 mark of Go-To Grandma episode “Sharing Caring” to hear more from Forget about your options as a U.S. property owner.

1 Consult your financial, tax, legal and other professional advisors for advice on your individual situation.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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