Almost three million people a year leave the winters in the frozen north of the Americas and escape to the warmer winters of the south. Many Canadians are among them, and experts forecast that the recent U.S. crunches in mortgages, foreclosures etc will mean that even more Canadians will be buying up vacation homes.

While it is definitely a good time to be investing in that vacation home, remember that the laws in the USA are different from the laws in Canada. You could breeze through the buying process and end up owning your dream home, but run into complications with disposal of the property on divorce or death.

This is a gruesome thought, but one that can be avoided with correct application of the law. One of the most common pitfalls happens when only one of the spouses is in the vicinity of the prospective property. The couple chooses the place together online, one of them is in the area on business, and he or she signs up for it and buys the property and voila, the home is theirs! Wrong! The home is ONE of theirs.

The problem arises when the couple decides that it is a convenient time to switch it over to both names. This is not an easy procedure in the States as it is in Canada. In fact, the name change is processed by the American Inland Revenue Services as a gift that is being given, and for this, the IRS has a tax!

Gift tax can be anything from approximately 20% to nearly 50% of the 'gift' (i.e. half the property value). To avoid nasty shocks like this, use a real estate agent that is familiar with the differences in property-buying law, and a lawyer who is familiar with which differences you will not know about.

To further complicate the US property buying procedures, the law is administered in different ways, according to the state in which you are buying. There are at least six different ways to register title to a property, depending on state and choice. Each way has unique implications for taxes on sale or at death. In a state like Arizona, there is also common property giving two more choices for title; this is a plus for Canadians as many of the snowbirds opt for the Phoenix Valley.

Capital gain is another tax you could run into. In this case, if it is payable, the Canadian Government will give you credit for the capital gains already paid in USA before they levy their own.

This may sound complex, but none of the above will need to trouble you as long as you are aware of it and hire a cross-border lawyer. Property is going for such a good price right now that it is worth the trouble, especially to Canadians who are getting more for their dollar these days.

Canadian citizens are allowed to reside in the USA for 182 days per year (approximately six months). There is one very big advantage to living in the states: if you get your green card, the income tax on pensions (especially higher bracket pensions) is much lower than in Canada.

There is another very big advantage: it is very relaxing and healthy living in the heat of the sun belt. If you pick the Arizona area, you can just pack your bags and leave the cough mixture and the arthritis heat pads behind!

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