Southern California is a literal hotspot for Canadian travelers. Not only does it have fantastic weather, it's home to world-class golf courses and the gorgeous natural landscapes of the Coachella Valley. So what better place to escape the harsh Canadian winters than the beautiful desert city of Palm Springs?
Snowbirds often spend several months at a time in Palm Springs, so many choose to buy a home here.
But buying a home in a different country means understanding a whole new set of rules.
International and faraway travel may be on hold for now, but it won't be like this forever. We're looking forward to life getting back to normal post-pandemic and it pays to be ready when it does.
So, whether you're still deciding on Palm Springs as your official vacation spot or you're ready to take the plunge into its real estate market, here is a guide on everything you need to know about buying a vacation home in Palm Springs as a snowbird:
What Real Estate Taxes Will I Need to Pay as a Non-Resident?
When you purchase a home in the United States as a non-resident, you are subject to pay a 15% withholding tax.
If you do not have a taxpayer identification number or a US Social Security Number, then you must pay this tax to the escrow company before the closing of the sale.
In addition to the withholding tax, the state of California requires the buyer to pay an additional withholding tax which is 3.3% of the sales price. This tax is state specific, so this is only true in the state of California.
Although this sounds like a lot of taxation, these fees are fully or partially refundable.
If you're interested in getting your money back, you should apply for the ITIN as soon as possible. The earliest that you can apply is the moment you sign a contract to sell your property in the United States.
Although this seems simple enough, getting the ITIN is actually quite complicated. This is because if any field is filled out with the wrong information, you're at risk for not receiving this number at all.
So, all applicants must seek guidance from a professional.
In the end, applying for the Individual Taxpayer ID Number is worth your while. You're up for a large refund on your money.
What Personal Taxes Will I Need to Pay as a Non-Resident?
If you're a Canadian staying in the United States for long periods of time, you're subject to paying personal taxes.
But it all comes down to the amount of time you're physically in the country.
This means that you may be off the hook for paying taxes depending on how long you stay in Palm Springs.
All in all, it boils down to the Substantial Presence Test. This is a test put out by the IRS to determine whether or not you will be considered a resident for tax purposes based on your length of stay over three years' time.
To be considered a "resident" you must be in the United States for at least 31 days of the present year, with a minimum of 183 days over the past 3-year period.
The days during the two years immediately before the current year are not counted as full days, but partial days. So, keep this in mind during your calculations and consult the IRS page for more information.
The question of how long you can stay in Palm Springs as a Canadian is a common one.
Usually, when Canadians come to Palm Springs, they want to stay as long as possible, but not so long that it's beyond their rights.
The maximum length of your stay in the United States can be 182 days per year, which translates to around 6 months.
This is the standard number for the average person, though exemptions are made for students, teachers, and diplomats, as well as anyone who physically cannot leave because of medical issues.
Although Palm Springs will gladly have you for around 6 months' time, it's important to know how long you are allowed to stay away from your home province without losing residency. If you're away for too long, you risk your provincial health care insurance.
Most provinces and territories in Canada require you to live in your home province for 5 months of the year for you to keep residency. Other provinces like Quebec and Prince Edward Island require you to be there for 6 months. Newfoundland and Labrador require only 4 months, while Nunavut and Yukon have no regulations on this matter.
Before leaving your province for a long period of time, check the residency laws to make sure you're not at risk of losing your health care.
Can I Rent Out My Palm Springs Home When I'm not using it?
If you're buying a home in Palm Springs as a Snowbird, odds are that you'll be looking to rent it out in the months that you're not using it.
There are strict regulations for renting out your home, especially when it comes to short term rentals, like Airbnb. You are only allowed to host an Airbnb 32 times per year. If you go over this number, you're subject to pricey fines.
Because of this, it's probably best to rent out your home for several months at a time. But, as long as you stick within the guidelines and sign rental agreements, you can rent out your home stress free.
Where Should I Buy a Home in Palm Springs as a Non-Resident?
Whether you like spending your days by the pool or at the golf course, you'll fall in love with the homes for sale in Palm Springs. There are also a variety of neighborhoods within the city that offer different atmospheres and amenities. You can learn more about which part of the city is right for you by visiting our Palm Springs Neighborhoods page.
Palm Springs real estate is best known for its mid-century modern homes. Everywhere you look you'll spot these gorgeous places with their low-pitched roofs and white-washed exteriors.
If you're looking to embrace the Palm Springs lifestyle, you'll definitely want to look for one of these beautiful mid-century moderns.
Though, these aren't the only properties on the market. You can find anything from new-construction homes to low-maintenance condos.
It's common for Snowbird to buy condos in Palm Springs because they offer comfortable and stress-free living. You don't have to worry about large scale chores and duties when you live in a condo, which is ideal when you're on an extended vacation.
It's typical for condo buildings to offer an array of amenities, like fitness centers and swimming pools for your complete enjoyment.
The average daytime high temperature in Palm Springs between November and February is between 70 and 80 degrees Fahrenheit (21 to 26 degrees Celsius), which is the ideal weather for all types of activities, from golfing to walking around the city center. However, keep in mind that the desert climate of Palm Springs means that it also cools off considerably at night. During December and January, the temperature can drop to anywhere between 40 and 50 degrees Fahrenheit (5 to 10 degrees Celsius) overnight, so don't forget to bring a jacket for your nighttime strolls through the downtown entertainment district along South Palm Canyon Drive.
Snowbirds sometimes come during the summer months, though it's less common. The valley becomes a complete dessert with temperatures that can reach well over 100 degrees Fahrenheit. But, if you love the heat, then this is the best time for you!
No matter what time of year you visit Palm Springs, there's always something to do. The city plays host to dozens of festivals and events throughout the year, like the International film Festival, Modernism Week, and the Coachella Music Festival, that are sure to keep you entertained.
Making Palm Springs Your Home Away From Home
If you're a Canadian Snowbird in Palm Springs, make this wonderful city your home away from home by investing in real estate.
Not only will you be able to enjoy your own comfortable space when in Palm Springs, you'll be building equity along the way.
If you have questions about buying a home in Palm Springs as a Canadian, connecting with me, Geoffrey Moore, for more information. I'm your expert guide for all things Palm Springs real estate!