10 Tips for Canadians Buying a Home in the Palm Springs Area

If you're a Canadian looking to buy a home in the Palm Springs area, or even a foreign national, these top 10 tips will guide you through the process. Let's dive in! Continue Reading

1. Property Taxes

Annual property taxes in the Palm Springs area are 1.25% of the appraised value of the property. For example, if you buy a home for $1 million, you will pay $12,500 in property taxes annually. These taxes are split into two payments and paid semi-annually. If you have a mortgage, your lender can include these taxes in your monthly payments through a process called impounding.

2. Supplemental Taxes: Mello Roos

Some communities in the Palm Springs area may have a supplemental tax called Mello Roos. This tax helps fund new infrastructure for communities and is commonly found in new development areas. It can range from $200 to $400 per month. Ensure your real estate agent checks if a property has Mello Roos before you make a decision.

3. Real Estate Agent's Commission

In most transactions, the buyer does not pay the real estate agent’s commission. The seller typically pays both the listing agent and the buyer’s agent commissions. This means you get professional help without the extra cost. Be upfront and honest with your agent to ensure a smooth process.

4. Explore Surrounding Areas

While Palm Springs is a popular destination, nearby cities like Palm Desert, Rancho Mirage, La Quinta, and Indian Wells offer more affordable options. Spend a week exploring the area, driving along Highway 111 from Palm Springs to La Quinta to see what each city has to offer.

5. Mortgages for Canadians

Mortgages are readily available for Canadian buyers in the Palm Springs area. Establish a US bank account before applying with a lender. Many lenders have programs specifically tailored for Canadians, making the process smoother.

6. Renting Out Your Home

If you’re not living in your home year-round, consider renting it out as a vacation rental. Property managers can handle everything for you, taking a 15-20% fee. Alternatively, manage it yourself with the right tools and systems in place. This can help offset the costs of owning two homes.

7. Length of Stay

Non-US residents can stay in the US for up to 182 days per year. Ensure you know your home province’s rules for maintaining residency and healthcare coverage. Most Canadian provinces require you to live in your home province for at least five months of the year to keep residency.

8. FIRPTA

When you sell your home, it will be subject to FIRPTA (Foreign Investment in Real Property Tax Act). This means a 10-15% withholding tax on the gross selling price. If your property sells for more than $300,000 but less than $1 million and the buyer intends to use it as their residence, the withholding is 10%. Consult with an accountant familiar with cross-border transactions to understand the tax implications.

9. Consult an Accountant

Before buying, consult an accountant who specializes in cross-border real estate transactions. They can help you understand the tax implications and ensure you are fully informed about the costs associated with owning a home in the US.

10. Homeowners Associations (HOAs)

HOAs are common in many communities, especially those with golf courses and amenities. They can range from $100 to $800 per month, depending on the services provided. Some people love the amenities and maintenance provided by HOAs, while others prefer to avoid them. Choose based on your preferences and lifestyle.