Panamá-Canadá

 Joy is a Toronto-based artist and recent graduate who makes a living by producing new work for galleries or on commission. On average, the 33-year-old earns $4,000 a month and eventually wants to own property — just not in Toronto.“I know I can’t afford to buy in Toronto,” Joy says. “And because I have lived in the U.S. and I’m familiar with the market, it feels like the best bet.”Joy’s savings goals are to purchase an investment property south of the border in the next year or so.“I would like to be able to put down 20 per cent and cap my mortgage at around $250,000 U.S.,” Joy says.Joy very rarely eats out and is diligent about saving. She lives next to a grocery store, so even when she doesn’t have time to cook she’ll grab a prepared meal instead of getting takeout which is much more expensive.She has $70,000 in a Tax Free Savings Account (TFSA) and $30,000 in a Registered Retirement Savings Plan (RRSP) and now wants to know the best way to prioritize her savings and finances in order to achieve her goals.“I like the security of having savings so I don’t want to use it all on my down payment costs, but I would like to get into the market as soon as possible,” Joy says. “Currently both funds are invested in long term growth accounts.”“Because I work as an artist and my income is not regular monthly, having some retirement money saved on my own is critical.”We asked Joy to track two weeks of spending to see what she can do.The expert: Jason Heath, managing director at Objective Financial Partners.Joy has $70,000 in a TFSA and $30,000 in an RRSP. The TFSA funds can be easily withdrawn and used as a down payment. The RRSP Home Buyer’s Plan is only for the purchase of an eligible home that the accountholder will live in, so cannot be used for a rental property.She hopes to make a 20 per cent down payment and borrow no more than $250,000 (U.S.) This suggests an upper limit of about $400,000 (Cdn.) with an $80,000 down payment. There are definitely rental properties she could buy for less than this in the U.S. depending upon where she wants to own.A Canadian resident can typically borrow money in the U.S. from a bank to buy a rental property. They may need 20 per cent or more as a down payment. It is probably best to get pre-approved for a mortgage before house hunting. Joy would need to file a U.S. tax return and also report the rental income on her Canadian tax return. Any U.S. tax paid should be eligible for a foreign tax credit in Canada to avoid double taxation.Joy’s investments are reportedly long-term growth investments. If her potential purchase is imminent, she may want to reconsider that strategy. When your time horizon is under 5 years, and especially well under, you may not want to have stock market exposure. Stocks often have negative one-year returns, and while it is uncommon to have multiple years in a row with negative returns, it is possible. You need to have enough runway to make stock market investing worthwhile, so be careful about taking on too much risk with funds intended as a down payment or for some other short-term use.Joy rarely eats out and thankfully lives next to a grocery store, so can even opt for a prepared meal if she wants something quick. Prepared meals may be more expensive than cooking from scratch, but they are definitely less expensive than take out, especially delivery.Spending in week one: $309. Spending in week two: $1008.Take-aways: Joy said it was helpful to start thinking about tax implications of purchasing a home south of the border and “to begin thinking about reducing market exposure of my down payment savings.”“I think a lot of millennials in Toronto who are keen on property ownership would probably soon start looking at the possibility of owning in the U.S.”Ghada Alsharif is a Toronto-based business reporter for the Star. Reach Ghada via email: galsharif@torstar.ca 

Joy is a Toronto-based artist and recent graduate who makes a living by producing new work for galleries or on commission.

On average, the 33-year-old earns $4,000 a month and eventually wants to own property — just not in Toronto.

“I know I can’t afford to buy in Toronto,” Joy says. “And because I have lived in the U.S. and I’m familiar with the market, it feels like the best bet.”

Joy’s savings goals are to purchase an investment property south of the border in the next year or so.

“I would like to be able to put down 20 per cent and cap my mortgage at around $250,000 U.S.,” Joy says.

Joy very rarely eats out and is diligent about saving. She lives next to a grocery store, so even when she doesn’t have time to cook she’ll grab a prepared meal instead of getting takeout which is much more expensive.

She has $70,000 in a Tax Free Savings Account (TFSA) and $30,000 in a Registered Retirement Savings Plan (RRSP) and now wants to know the best way to prioritize her savings and finances in order to achieve her goals.

“I like the security of having savings so I don’t want to use it all on my down payment costs, but I would like to get into the market as soon as possible,” Joy says. “Currently both funds are invested in long term growth accounts.”

“Because I work as an artist and my income is not regular monthly, having some retirement money saved on my own is critical.”

We asked Joy to track two weeks of spending to see what she can do.

The expert: Jason Heath, managing director at Objective Financial Partners.

Joy has $70,000 in a TFSA and $30,000 in an RRSP. The TFSA funds can be easily withdrawn and used as a down payment. The RRSP Home Buyer’s Plan is only for the purchase of an eligible home that the accountholder will live in, so cannot be used for a rental property.

She hopes to make a 20 per cent down payment and borrow no more than $250,000 (U.S.) This suggests an upper limit of about $400,000 (Cdn.) with an $80,000 down payment.

There are definitely rental properties she could buy for less than this in the U.S. depending upon where she wants to own.

A Canadian resident can typically borrow money in the U.S. from a bank to buy a rental property.

They may need 20 per cent or more as a down payment. It is probably best to get pre-approved for a mortgage before house hunting. Joy would need to file a U.S. tax return and also report the rental income on her Canadian tax return. Any U.S. tax paid should be eligible for a foreign tax credit in Canada to avoid double taxation.

Joy’s investments are reportedly long-term growth investments.

If her potential purchase is imminent, she may want to reconsider that strategy. When your time horizon is under 5 years, and especially well under, you may not want to have stock market exposure. Stocks often have negative one-year returns, and while it is uncommon to have multiple years in a row with negative returns, it is possible.

You need to have enough runway to make stock market investing worthwhile, so be careful about taking on too much risk with funds intended as a down payment or for some other short-term use.

Joy rarely eats out and thankfully lives next to a grocery store, so can even opt for a prepared meal if she wants something quick. Prepared meals may be more expensive than cooking from scratch, but they are definitely less expensive than take out, especially delivery.

Spending in week one: $309. Spending in week two: $1008.

Take-aways: Joy said it was helpful to start thinking about tax implications of purchasing a home south of the border and “to begin thinking about reducing market exposure of my down payment savings.”

“I think a lot of millennials in Toronto who are keen on property ownership would probably soon start looking at the possibility of owning in the U.S.”

Ghada Alsharif is a Toronto-based business reporter for the Star. Reach Ghada via email: galsharif@torstar.ca