Condo Unit Inquiry

[nj2Type-S]

Hey guys!

My wife and I are looking at purchasing a condo unit as an income property. This will be outside of Canada. This will be our first time to potentially purchase a property outside the country. For those who can give their input, here are some of my queries:

1. The condo building breaks ground in January 2018. The developer is in pre-selling pricing. All units are priced the same; from 5th floor to 27th floor (top floor is 33, but no solid info yet). There are really no “views” as there are other residential towers adjacent to this tower. My question is as follows: If there are no views, is it better to ger a unit near ground, or is higher the better? We are looking more for what tenants (or possibly airbnb renters) will be looking for.

2. For those with first-hand experience, how difficult is it to file taxes with your our-of-country property?

Thanks!

[pheoxs]

Can’t speak to 2 but for 1 higher is always better. Even if you directly face another building then the higher up you are the more light you’ll get inside and you can somewhat see over the other building to give the illusion of a better view. It extends to airbnb as well when it comes to advertising. 25th floor condo sounds better than 5th floor condo even though they might be the exact same

[s2k_boi]

I'm not a tax expert. But you might want to share where you're buying as different countries have different rules and treaties.

Just like above. Higher is usually better.

[revelations]

If the new builds are anything like in AB (depending on local laws) I would personally avoid them as there is huge potential for special assessments and other stupid shit to go wrong the first 0-4 years.

[rage2]

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2. For those with first-hand experience, how difficult is it to file taxes with your our-of-country property?

I looked into Hawaii property years ago, and it wasn't worth the trouble (not to mention Hawaii restrictions on foreign ownership). Taxation is a bit of a nightmare, but IIRC the best way to avoid US taxes especially potential estate taxes is to shield the purchase as a Canadian numbered corp. Talk to a financial expert on how to structure it to determine if it's worth it. For me, it wasn't worth it, and renting while on vacation was the better solution. US taxes absolutely fucking sucks and is complicated as fuck.

For other countries not US, if the country doesn't have reciprocal foreign tax credits with Canada, a sale would end up double dipping on capital gains taxes on Canada and your property's country.

[bh87]

Higher floor is better from an investment standpoint, check the bylaws to see if short term rentals (Air bnb) are allowed, check what the proposed condo fee is (expect it to move to around $0.50/sqft after the first year), find out which management company is proposed to run the building and do some research on them. If there is a pool, I would not buy into the building.

If the property is worth more than CAD equivalent of $100,000 you will be required to file a T1135 report of foreign assets and report foreign income (not difficult just one more thing to fill out at tax time). Proof will be required that you have payed tax on that income in the country it is in (if it is more advantageous than in Canada) to avoid having to include it in your Canadian Tax return and avoid double taxation. Otherwise expect to have to remit a withholding tax to CRA monthly after the first year of reporting (example: USA is 15%), this amount will then be credited towards taxes owing (if any) at year end tax time.

It is worthwhile to sit down with an accountant to discover the most advantageous way to buy, own and manage this property such as through a corp, trust or personal name.

Will this income be used to bolster current income or is it more of a retirement savings/rainy day plan as well as somewhere you can stay when you want to? Will it be rented furnished or unfurnished? Are you familiar with the climate in the place this condo is and what upkeep entails (humidity concerns, different insects/pests to control, neighborhood risks, who will be available to assist the tenant if need be).

[Buster]

What Rage said. If you can avoid the IRS getting you on record personally, do so. Even if it costs you prof fees. If the prof fees are too much relative to the project that you don't want to pay them, then it's just not worth it.

[nj2Type-S]

thanks for the response, everybody!

the property that we're looking at is in the Philippines. it's a high-rise condo building that allows airbnb renters, so that's been confirmed. having never bought a condo before, I just wasn't sure if I should go for the lower floors for easier access, or the higher floors for the "bling" factor, even though there are no views. being only around 2000 CAD difference from 5th floor to the 27th floor, it was worth looking at it.

the total price of the condo is just over 80000 CAD. basically, if I were to airbnb it and have it occupied at least 80% of the time, I will almost make the same money with that unit, as I would with my duplex rental property here...which is kind of sad lol.

[S-FLY]

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thanks for the response, everybody!

the property that we're looking at is in the Philippines. it's a high-rise condo building that allows airbnb renters, so that's been confirmed. having never bought a condo before, I just wasn't sure if I should go for the lower floors for easier access, or the higher floors for the "bling" factor, even though there are no views. being only around 2000 CAD difference from 5th floor to the 27th floor, it was worth looking at it.

the total price of the condo is just over 80000 CAD. basically, if I were to airbnb it and have it occupied at least 80% of the time, I will almost make the same money with that unit, as I would with my duplex rental property here...which is kind of sad lol.

One thing to consider is that the higher floors might pay more per sq/ft in condo fees. I seem to recall when I bought in Keynote that there were higher floors that paid more condo fees, even though they were the same sq/ft inside the unit (more common space to get up there? I dunno). I guess that's worth asking about or maybe someone here can comment.

[gwill]

your nuts if you think you will have 80 percent occupancy. Air bnb keeps data on the top cities and id guess the city you want to buy in isnt one of them.

You also need to factor in if it actually breaks ground in 2018 or not. If you have so many options of floors to pick from with the same floor plan then the building is clearly not sold out. You dont see new construction start building until it's 50-60 percent sold out.

It seems your building will be a high rental occupancy fighting for the same air bnb tenants. You'll be at a disadvantage for responding to potential renters knowing the time difference.