My question is: Canadian-specific

QUESTION: Thank you in advance for your website. My husband is a u.s. citizen and I have a green card to live/work in the u.s. permanently, am a Canadian citizen.  We want to buy lake property costing $300k for vacation use. We have IRA $120k; 401k $350k, stock $26k, cash $38k. We owe $50k on our permanent california residence valued at 430k. Monthly retirement income is $3275.  I thought we would use the cash, stock, and cash out some of the 401(k) to buy the property outright. Is this wise?


david ingram replies:

On the surface it might be  okay but you need to do a spreadsheet to figure out the most tax efficient way.

Because the mortgage interest and the property taxes on both properties is a schedule A tax deduction, it is likley that you would be better off to increase your mortgage on the family house and finance the cabin more than you intended to.

Then, each year you would cash in enough of your pensions to make the payments.  This will undoubtedly result in lower tax overall.

Do consider taking out your US citizenship.  It will / should make it easier to deal with the estate situation if your husband passes away. And, if you should decide to come back to Canada at some time, they can not stop your returning to the US in the future if you should decide you want to go back to the US.

Over the years, I have had a couple of dozen situations where your husband pases and you return to Canada after and then decide to go back to the US becasue the kids are there or something and find that your green card is no longer valid and thye USCIS will not let you back in.. �