Stephen Brown never intended to buy a vacation property. The Toronto-based partner with Deloitte loved to travel with his family, but a 2011 skiing trip to Canmore, Alberta, changed that. “We absolutely fell in love with the mountains,” says Brown.
Later that year, Brown purchased a two-bedroom, $650,000 townhouse condo about seven kilometres outside of Canmore. The family now spends about 14 weeks a year there, skiing and checking out the Banff Mountain Film Festival. “We wanted quiet, we wanted views,” he says. “I’m a minute from awesome mountain-bike trails.”
With long winters and a love of the outdoors, Canadians adore second properties. According to the National Association of Realtors, Canadians were the second-biggest buyers of U.S. real estate from April 2016 to March 2017, spending $19 billion on American homes.
If you want to buy a condo or cottage, dig around first. You may be purchasing in an unfamiliar part of the country or world, and choosing a place for rest and relaxation can come with different priorities. Here’s what you need to know before buying a vacation home.
“It really comes down to lifestyle,” says Christopher Vincent, senior vice-president at Sotheby’s International in Canmore. If you’re into walking and love nightlife, then choose a property that’s close to a town, he says. Brown initially loved his condo’s secluded location, but now he’s thinking of moving closer to town so they’ll need the car less when in Canmore.
Also, research the local amenities. The area may be pretty, but are there public trails where you can walk or ski? Some parts of cottage country can seem remote, but may have great restaurants and shops. Find out if the area stays busy all year round or if the shops close in the off-season.
When considering the kind of property to buy look at how much time you’ll be spending there. Condos are turnkey while houses and cottages need more monitoring and upkeep.
If you plan on working from your vacation home, choose a locale close to work or with access to high-speed Internet, adds Vincent.
Right-size your property
When considering the kind of property to buy – house, condo, villa or cottage – look at how much time you’ll be spending there, says Vincent. Condos are turnkey and have built-in security, while houses and cottages need more monitoring and upkeep.
Dave Sage, a realtor with SageRealtor in Cape Coral, Florida, says he routinely drives by massive, empty villas. “They’re here two weeks a year,” he says of the owners. In these cases, says Vincent, you’ll need to have someone check on the property regularly, or hire a service, to satisfy insurance requirements.
Two-bedroom condos in ski towns like Canmore are about $650,000 on average, with houses starting at $1 million. In Coral Gables, Florida, condos range from US$300,000 to $700,000, with US$300 to $600 per month in maintenance fees. To the south, in Naples, waterfront mansions can start at US$15 million.
Account for travel costs and whether you can drive, or need to fly. Cottages close to cities like Toronto can cost $1 million, but prices are lower for cottages that are a longer commute from a major centre.
Renting out a property can be a great way of generating income while ensuring your home is occupied when you’re not there, but it comes with risks, such as damage and theft. If you choose to rent on Airbnb, you must also check whether there are rules governing your type of property, says Vincent. Realtors can also connect you with local firms that can rent your property for you.
Tally up tax
Take a close look at taxes you’ll be paying for the property, as each province is different. Before buying U.S. or other foreign real estate, consider both the Canadian and foreign tax implications of property ownership. How will rental income or the proceeds of a sold property be taxed? It’s best to be aware of these costs before purchasing the property so they can be included in your budget.
In southern climes, you may have frequent mould issues due to humidity, insect infestations or storm damage. In northern locales, you risk having pipes freeze in detached homes, damage from wild animals, or septic problems. Have a contingency plan in place for these events.
Brown is now thinking ahead – hoping to buy a larger place that will accommodate the ever-growing list of friends and family visiting him in Canmore. “We’re going to spend more time there in the future,” he says. “We just love it.”