International tax expert Roy Berg of Calgary says Canadians who own U.S. real estate should consider that tax traps could be coming as the U.S. Congress looks at allowing Canadians to stay south of the border for a longer period of time.
A longer stay could lead to serious tax consequences, Berg said.
"Sounds like a great idea. Everyone's going crazy for it. But there's four big traps, or bombs, that come into play," said Berg, who is a partner with Moody LLP.
He said Canadians need to be aware of the issues and plan accordingly.
The JOLT (Jobs Originated through Launching Travel) Act would allow Canadian snowbirds to spend up to 240 days each year in the United States without a visa. Currently the limit each year is 182 days.
But Berg said the snowbird visa is a trap for the uninformed for several reasons.
First, if an individual is in the U.S. too long, they could lose their provincial health care coverage. Second, Canada could impose a departure tax.
From the American point of view, Canadians could be taxed on their worldwide income as well as being subject to the U.S. estate tax on their worldwide assets when they die, Berg cautioned.
