In our continuing association with Dale Walters, he is offering a follow-up to a previous blog.

Dale Walters is a Cross Border Tax Expert and writer of Buying Real Estate in the US – The Concise Guide for Canadians and he wrote the following for my client(s).  

“On December 29^th, 2011, I posted a blog entitled “Things you may not know about using a Cross Border Trust SM”.  Some of the feedback I received since that time has prompted me to update that blog to make sure that potential Canadian buyers of real estate in Arizona have all the best information possible. 

The benefits of this structure that I did mention were correct.  The Cross Border Trust SM requires no ongoing maintenance or extra tax filings, and it does avoid probate.  However, it also avoids the problem of an Arizona Guardian ship procedure that is required if the owner becomes incapacitated.  It does so by providing replacement trustees and beneficial decision makers in the event that the owner of the trust can no longer look after his or her own affairs. 

It is also true that the Cross Border Trust SM does not avoid US estate tax.  However, it does offer some estate tax benefits that I did not previously mention.  For example, this structure typically involves a division of title between two trusts where a property is owned by a couple (legal fees should be the same for one or two trusts).  The advantage gained by doing this has several facets.  Firstly, the presumption of full ownership in the first decedent is defeated.  This presumption arises from section 2040(a) of the Internal Revenue Code, and can result in a joint owner’s estate being taxed on the full value of a property as though he or she owned it alone.  Where the owners are not residents of the US, the exception for joint ownership between spouses does not apply, so Canadians need to implement their purchase with this in mind.

Secondly, with title split between two trusts, the IRS will likely accept a valuation discount when the personal representative reports the value of the property in the decedent’s estate tax return.  The discount may be approximately 20% – 30% of the value of the deceased spouse’s share of the property.  As such, with the Cross Border Trust SM structure, each spouse would be taxed on less than half the value of the US real estate, as opposed to the entire value if it were held in joint tenancy, which can save thousands of dollars in US estate tax.

Beneficiary deeds, while effective at avoiding Arizona probate, will not provide the US estate tax advantages available with a Cross Border Trust SM.  Nor would a beneficiary deed address the incapacity issue.  The latter could be solved with other legal documents, such as an enduring power of attorney, living will and healthcare surrogate designation.  However, many clients may prefer the simplicity of creating one Cross Border Trust structure, rather than having a suite of different legal documents prepared to address issues piecemeal.

Where creditor protection is a concern, more sophisticated planning is certainly required.  The relative simplicity of both beneficiary deeds and Cross Border Trusts mean that creditors can enforce claims against any of the owner’s assets.  To protect yourself against the potential claims of creditors, separate entities such as limited partnerships or corporations are required.  Corporations often have adverse tax consequences for Canadians relative to other structures, and limited partnership interests are considered probate assets.  Another option would be to hold the property in a Cross Border Irrevocable Trust, which avoids US estate tax, probate, guardianship, and creditor issues.

As you can see, there are many factors to consider, and many options to choose from.  Usually, the particular circumstances and objectives of the client determine the most appropriate structure.  Often a combination of tools is required to customize the optimal estate plan.  That is why seeking advice from a cross border professional is always advisable.”

 I highly recommend you obtain advice from a Cross-Border tax expert and any questions or concerns you have about purchasing real estate in Arizona.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

Potential home buyers scanning the Phoenix area for good deals should think about acting quickly. After a recessionary dip, the area’s real estate market is beginning to show signs of improvement. Resales ended 2011 on a strong note, generating a higher median sales price and fewer foreclosures in December, compared with the last month of 2010. 

The buyer’s market is starting to dissipate as competing buyers move in. The demand for homes is strong, and the inventory is shrinking. At the peak of the market, in 2009, MLS listed more than 50,000 homes in the Phoenix area. Since then, multiple listings have dipped to fewer than 18,000 homes, and bidding wars are once again becoming more commonplace.

Another telling development: New home builders are able to demand higher home prices, and they’re paring back some once-reliable incentives, which we haven’t seen here in years. 

What used to be “negotiable” when purchasing Phoenix real estate is not as negotiable.  The lower priced inventory is selling close-to or at list price if not over list price.  If you are serious about buying a house in Phoenix, “low-ball” offers are not happening now-a-days so you must be realistic on your offerings.  Plus, the Phoenix Metro comparative sold property prices have not caught up to the current market closing prices.  So remember, with less than average multiple listings available, you have to be more aggressive in the Phoenix real estate market if you want to own a piece of the Arizona sun!

When searching the MLS, don’t just search by price but also by location.  There are several areas to consider.  Make sure you do your due diligence and with the internet you can learn a lot about an area, including but not limited to crime and school districts.

You can get in on the action, too. But don’t delay or you risk being left out at a most opportune time. To learn more about “owning a piece of the Arizona sun,” please contact Diane Olson, 480-794-1106 or www.dianeolson.ca.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

When you purchase real estate it is important to protect your home/investments; here is some  information and tips to keep in mind.

Examples of Types of Coverage:

Dwelling Coverage – insures the home

Personal Property – Covers damage to, or loss of personal property

Other Structures – Covers damage to other structures or buildings

Personal Property – covers damage to, or loss of personal property

Additional living Expense – covers additional living expense when incurred

Personal Liability – Covers personal liability

Medical Payments – Covers medical expenses

Additional Coverages can be purchased for: extra contents, replacement cost, personal property extensions, additional liability as well as coverage for specific area conditions (i.e. flood, earthquake, etc.)

How much coverage is needed?

Have enough to cover:

Your property and belongings (protect your pocket book)

Self protection (against lawsuits)

Lender requirements (if applicable)

Policy requirements (discuss with your insurance company agent)

Benefits of Homeowners Insurance:

• Coverage to repair or rebuild your home if it is damaged as a result of a covered loss
• Protects your personal property from disasters, accidental damage, or even theft
• Protects yourself from liability in the event that someone has a dispute with your over an incident on your property

Other tips:

• Research the insurer’s records for claims service (a discount on the price of insurance will not make up for slow claims processing)
• Is company financial stable
• ‘Risk’ is what the cost of homeowner’s insurance is based on
• Insure your home based on the replacement cost – how much would it cost to rebuild or replace items

This is just some food for thought.  Hopefully this will help you ask the right questions when you are investigating your insurance options.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

 By law, Realtors cannot tell you where to buy a home, or steer you away from a specific area.  So where do you go to find out about crime or if the location you like is safe?

Realtors recommend you do your due diligence by driving around the area, take a closer look at the houses and take note of the people walking on the street, talk to the neighbors or local authorities.  Still, how do you know for sure this is the neighborhood for you? 

One of the pieces of information that the Diane Olson team provides all clients is the “Buyer Advisory”.  This is a resource for real estate consumers published by the Arizona Association of Realtors.  This resource has a variety of website links to visit, including one for the local law enforcement agency that can help answer your questions about the neighborhood you want to live in.

After you complete your area due diligence and purchase your new home, you still need to prepare your home for the times you will not be there.

If you’re only here in the winter:

•  It’s important to have a property watch company stop by each week, pick up any papers that have been discarded, check windows and doors, check under the sink for leaks, run the water in each sink and flush every toilet to help eliminate any odors in the pipes.

If you have a car:

• Ask them to start it up once a month to keep the battery charged.

These steps will give you piece of mind and your neighbors will appreciate the fact that you want to keep the neighborhood free of newspapers and that “vacant unattended house look”.   In addition, there are, of course, security systems with cameras that you can install in rooms that allow you to watch your house from Canada.  Best Buy sells these types of security systems starting around $300.  There are also security companies that you can hire to monitor your home locally.  These companies’ rates start around $25 to $30.00 per month.

In addition to taking care of your property, there is always a chance that your home can be vandalized, you need to be prepared.  Here are some suggestions:

• Take an inventory of your purchases.
• Take photos of your furniture, pictures hanging on the wall, and kitchen appliances, place them in a notebook or binder with the receipt of purchase attached next to it.

If anything should happen, burglary or fire, you have a record and photos to show the insurance agent of the item and the cost to purchase.

•  Mark your property, such as tools, kitchen appliances, electronics, TV, and pool equipment, either by etching each item with your name and phone number or with a permanent marker.

If property is recovered later from a burglary, the police will know how to contact you.

Update your records on a regular basis. As soon as you purchase a new piece of furniture, equipment, electronic device, or add to a tool collection, take a picture of it, log the serial number into a log book, data file or a folder.   Being proactive in protecting your property is always the best solution. 

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

In trying to answer questions or concerns that are commonly asked I have often turned to experts for answers in the areas I can’t advise in.  I introduced you to Dale Walters last week in the blog about how to title property in Arizona.  Dale has graciously offered to help address other inquiries and will be a featured contributor to our blog section.

Dale Walters is a Cross Border Tax Expert and writer of Buying Real Estate in the US – The Concise Guide for Canadians and he wrote the following for my client(s).

“The virtues of Canadians using a Cross Border Trust^SM (CBT^SM) when buying real estate in the US are being widely espoused.  However, there are some misunderstandings about what the benefits of using a CBT^SM really are.  In this blog I will attempt to clear up any misunderstandings.

The benefits to the buyer are relatively few, and they are:

1.       Assets held in the CBT^SM avoid probate at death.  Probate is the legal process of settling an estate and the cost can be as high as 3%.

2.       There are no ongoing costs, such as filing tax returns.

 All other benefits are for the children if the assets of the trust remain in the trust when they pass to the children.  Those benefits are:

1.       Assets are protected from the children’s creditors, including a former spouse

2.       Assets avoid US nonresident estate tax at the children’s death

3.       Avoids probate at the children’s death

 Here are the things the CBT^SM does not do for the buyer:

1.       No US estate tax benefits

2.       No protection from creditors

Some other things to note are that 12 states, including Arizona, allow the owner of property to name beneficiaries using a Beneficiary Deed.  The other states are Arkansas, Colorado, Kansas, Minnesota, Missouri, Montana, Nevada, New Mexico, Ohio, Oklahoma and Wisconsin.  This process works like the beneficiary designations on your RRSPs or life insurance.  Because the property passes via a beneficiary designation, there is no probate.  The cost of a Beneficiary Deed is de minimus, $50 or less, and the beneficiaries can be changed at any time before the last person’s death.

In my experience, buyers are not generally interested in the benefits the CBT^SM provides to the children, if you are, you should accomplish the same thing by incorporating those provisions into your existing estate documents.  After all, if these benefits appeal to you, shouldn’t all of your assets (or least most of them) pass via a trust to protect all of the assets and not just the US home?

 So in summary, if you are buying a home in Arizona, you can achieve all of the lifetime benefits of the CBT^SM for virtually no cost, or you can spend $5,000.  In both cases you can buy a large liability insurance policy to protect you from lawsuits.  If you are uncomfortable with the idea that the insurance may not be enough or may not pay when needed, then you should form an entity for asset protection.  I have discussed entity selection in the past, but to summarize, I suggest using a Limited Liability Partnership (LLP) if you are buying the property as a couple.  In most other cases, I suggest using a Limited Liability Limited Partnership (LLLP).

Next week I will discuss what you may not know about the Cross Border Irrevocable Trust^SM.”

I highly recommend you obtain advice from a Cross-Border tax expert and any questions or concerns you have about purchasing real estate in Arizona.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

My clients frequently ask me how they should hold title when purchasing a property in Arizona. Since I am not an accountant or a lawyer, I can’t provide that advice therefore I contacted Dale Walters, a Cross Border Tax Expert and writer of Buying Real Estate in the US – The Concise Guide for Canadians and he wrote the following for my client(s).

 “There are three basic ways of owning US propriety;

(1) hold in your own name, and take out a large insurance policy, or

(2) use a Cross Border Trust (CBT), or

(3) Limited Liability Partnership (LLP), or a combination of a CBT and LLP

 Factors to consider:

1. Type of risks and potential magnitude of risks,
2. The risk tolerance of the buyer, and
3. The cost of the solution relative to the risk and the investment 

 The primary risks are:

Potential lawsuits

The potential for a lawsuit increases with certain types of properties and the number of properties owned.  For example, if the investor buys homes with pools and/or stairs, the risk increases. 

US probate

Probate is the cost of settling your estate at death and can be as high as 3%.  In many states such as Arizona, probate can easily be avoided by using a beneficiary deed.  If a beneficiary deed is used, the asset goes to the beneficiary(ies) directly and does not go through a probate, therefore there is no probate fee.

US nonresident estate tax

The risk of US nonresident estate tax is typically not an issue because of the US-Canada Tax Treaty. 

None of these solutions can accomplish everything, so you have to decide what you are most concerned with and protect yourself from that risk.  Because of the Treaty, estate tax is not a concern for most investors.  If you are buying a second home and not renting the property, you can own the home in your own name(s) and use a beneficiary deed to protect you from probate.  If you are renting the property, you should decide if owning the property in your own name and having a large insurance policy is enough protection.  If it is, then again, owning the property in your own name and using a beneficiary deed is sufficient.  If, on the other hand, you are concerned about the potential liability, you should own the entities in an LLP.”

The “Diane Olson” advice – contact a true cross-border tax expert, such as Dale Walters, and make sure it is one who is looking out for YOUR best interest and who explores all your options thoroughly (global asset picture).  This will be money well spent.  I have several trusted cross-border partners to recommend if required.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

On a quite day some time back, my husband and I, were looking to do something… not sure what, just wanted to get out and about for awhile.  We had heard about and then saw on national TV where they highlighted the only working olive farm and mill in Arizona that has a great olive oil.  It is right here in our backyard.  So off we went!

Located at the base of the San Tan Mountains in Queen Creek is the Queen Creek Olive Mill.  They produce a boutique hand-crafted extra virgin olive oil using nine varieties of olives.  This is a family owned company who for more than a decade has been producing different olive varieties to see what grows best in the Arizona desert.   With results, in my opinion, some of the best olive oil around while practicing sustainable farming practices.  They are dedicated to the environment and health of their customers.

You can enjoy:

• ·         Tour and learn how they produce their olive oil
• ·         Sample their wide variety of the flavored oils, baked goods, pastas and sauces
• ·         Purchase their products (great gift ideas; gift sets, tapenades and spreads)
• ·         Enjoy shopping for all olive related items (a wooden olive spoon to die for!)
• ·         Visit their Tuscan inspired eatery
• ·         If you’re lucky, there might even be a wine tasting event   

The Olive Mill is located:

25062 S Meridian Road

Queen Creek, AZ 85142

Phone number: (480) 888-9290

Hours of Operation:

Monday-Thursday 9am-5pm

Friday 9am-8pm

Saturday 8am-8pm

Sunday 8am-5pm

You might want to check the driving directions before heading out on their web site or call as it can be tricky but worth the effort.

Hope you take the time to discover this local treasure and enjoy a stroll through the olive grove, a tour of the mill and some great food!

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

I have been asked over and over again how many days can a Canadian legally stay in the US.  As most know, Canadians wintering in the US are subject to US income tax if they exceed a certain number of days each calendar year. 

 Recently I spoke with Dale Walters, CEO of KeatsConnelly.  Mr. Walters is an expert on cross border taxation and is the author of Buying Real Estate in the US – The Concise Guide for Canadians.

 To determine the number of days, Dale Walters states the following:

“The confusing part is that there is a two-part test to determine if you have stayed too long and are therefore subject to US taxation.  The first test is the easy one; if you are in the US more than 182 days in any calendar year, you fail the test and are considered a US resident and taxpayer.  You do not want to fail this test because the options for fixing it are limited and can be expensive.  The second test is a formula based on the number of days you have spent in the US over the past three years, with the older years having less weight than the newer years.  In the current tax year (2011), each day counts as one day; in year two (2010), each three days count as one day; and in year three (2009), each six days count as one day.

Let’s assume that you are a snowbird that comes to the US every year from November 1 to March 31, which is a total of 151 days (152 in leap years).  You have clearly passed the first test as you were not in the US for more than 182 days during the year.  However, you failed the second test and if you do nothing, you are considered a resident of the US and are required to file and pay taxes in the US.  Here is how it works:

 Year 1 – 151      divided by 1    =       151

Year 2 – 151      divided by 3    =         50

Year 3 – 151      divided by 6    =         25

Total                                                    196   You have FAILED the test

Here is where Form 8840 comes to the rescue.  You acknowledge that even though you have failed part two of the test, you did pass part one and you are in fact a resident of Canada because of your “closer connection” to Canada.  Form 8840 asked you questions about where your permanent home and personal belongings are located, where your family is located, where you maintain you professional, social, political and religious affiliations, where your car is registered and from where your driver’s license is issued, among others.”

You must file this form every year you fail the second part of the test.  Do not expect to hear back from the IRS; no news is good news.  You can find the form at http://www.irs.gov/pub/irs-pdf/f8840.pdf

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

One of the most fun things to do here in Arizona (I love going) is to attend a Hockey Game!  As an Arizonian, I have learned quite a bit from Canadians.

 Here are some really cool tips on attending games here in Glendale! 

• when to arrive
• how to save money
• how to find inexpensive Valet parking
• the time to dine to get half off on drinks and meals

Best exit from the freeway is Glendale Avenue, then go straight to the center of the restaurants and watch for the signs of Valet Parking for $5.00!  Do not exit on Bethany Home as the Valet Parking is higher up to $25.00 because there are no restaurants on that side of the stadium.  Valet Parking is paid in advance and you can walk to all of the restaurants and stadium within five minutes.

Arrive early 4:30 pm if game is at 6:30 pm if you are going to eat dinner.  Most of the restaurants have big discounts on drinks and dinners as long as you order before 5:00 pm plus this will give you plenty of time to meet up with friends and also walk around all of the shops because most of the shops are closed after the game is over so arrive early and save yourself money.  Reservations at most of the restaurants can be made in advance the day of the game.  Don’t worry if you do not have reservations as long as you arrive early.

When attending a Hockey game always taking gloves for your hands, a blanket for your legs and a coat as the Coyote Stadium is quite cold and not comfortable if you forget these items.  If you for some reason forget a blanket, I have seen Coyote blankets at different shops walking distance to the stadium.

Don’t be surprised if you see yourself on the monitors so wear your favorite Sweat shirt and baseball cap.  Don’t forget your white handkerchiefs so you can join in on the fun!  (I’ll be looking for you.) 

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.

Okay, so we don’t have snow in the valley much during December which may make it hard for you to get into the spirit of Christmas.  It can also be why you see so many decorations here, as it is our way of bring that feeling to life.

Here are a few tips to consider!

In Arizona, live greenery dries out quickly and often leaves disappointment by the time Christmas arrives.  Here are a few ways to use other decorations to enhance the Christmas décor.

Ornate Chandelier – A great way to glitz up your dining space is to make a hanging centerpiece showing off your ornaments.  Take your favorite ornaments and hang them from your dining room chandelier. This looks best when you string baubles at different levels with colorful ribbon.  Don’t be afraid to use colors you enjoy, remember Christmas doesn’t have to be red and green!

2-D Tree – If you want to save a tree or avoid the messing needles, use strings of Christmas lights, to make an outline of tree on a wall.  Lightly pencil an outline of a Christmas tree on the wall (you can remove it later with a clean art-gum eraser); secure two tiny nails or tacks at each “point” and run the cord around the edge.  Even when you have a small room you can create magic and if you home is large this is a great way to brighten up a hallway.

Dress up a Wreath – Instead of hanging one above your fireplace, establish a focal point by using a mirror to frame it.  This is a great idea and much unexpected in a bedroom.  Embellish a plain, readymade wreath using your favorite ornaments, and use one that coordinates with the rooms color.  You can also use tiny gold and silver ornaments, which don’t clash with any other colors in the room.  To install, run a loop of wide ribbon around the wreath and hook it on the nail behind the mirror.

Beautiful Wrappings – Wrapped packages or wrapped empty boxes is a great way to dress up a room and add that festive feeling.  Select different patterns and solid papers in the color you have chosen to decorate with.  You can match the blues or greens in the room or use a selection of gold or silver.  Remember to use a variety of different size packages and stack or arrange them to fill you space.  Make your arrangement more interesting by using large baskets to hold packages or a child’s wagon or old fire engine push toy.  These added touches add a unique charm to your Christmas décor.

Don’t forget to use Christmas lights on the outside of your home.  Wrapped around cacti and laid on bushes and trees can add lots of curb appeal.

Diane Olson is a former Canadian police officer whose team of agents  has earned its reputation as Canada’s go-to realtor for Canadians looking to buy vacation and investment property in Arizona.