Most Americans think of Canada as a snowy, cold wasteland. They can’t imagine buying a vacation home there instead of someplace warm and tropical. However, Canada has a lot to offer in the form of vacations, and vacation homes. From seaside cottages on Prince Edward Island to upscale condos in Montreal or Toronto, to ski homes in the Canadian Rockies, there are a plethora of vacation home options.
When it comes time to actually invest in a vacation home to return to year after year, there are some things that American buyers need to keep in mind.
1. Where/What to buy?
Just as when buying a primary residence, location, size, and home features are going to be important. It’s not just about being close to the beach and having great views. Buyers need to consider whether mountain roads get closed leaving them snowbound for weeks or months, utilities, maintenance of the property during off-season, and whether they need to store sports equipment year round or have adequate parking for their car.
2. Legal Matters
Living in the home less than six months out of the year makes the homeowner a non-resident. Some Canadian provinces (Alberta, PEI, Saskatchewan and Manitoba) have restrictions on the type and/or amount of property non-residents can own. Mortgages for non-residents require a higher down payment than for residents (usually 35% versus 25% for residents) and must be obtained from a Canadian bank, not a foreign one.
Since a vacation home, by definition, is only used a short time each year, many buyers choose to share ownership. This may be through a formal time-sharing agreement or an informal one with family or friends. In the latter case, it is important that all those involved understand whose name will be on the deed and how much time each buyer is entitled to based upon the amount they pay. It’s probably a good idea to have a written agreement even amongst family members who are sharing ownership of a vacation home, if for no other reason than to avoid arguments about who gets the house when.
During the off months someone will need to keep an eye on the property, even if it is closed down. Checking on the condition of the property or maintaining it during off-season requires a local caretaker. This may be someone who is paid a fee or someone who lives on part of the property year-round in exchange for caretaking. An alternative is to rent the house out to a tenant during the rest of the year. This works well for students or other seasonal residents whose schedule is complementary to the owner’s use of the home.
These are hardly the only considerations when shopping for a Canadian vacation home, but it is a good place to start in doing research and beginning the process.