A home in the sun — it’s the snowbird’s dream. Whether it’s a beachfront bungalow in Florida, a condo in Arizona, or a rancher down the road from a California golf course, the United States offers plenty of opportunities.

As pleasant as the dream of ownership sounds, the reality of buying property in the U.S. is a little more complicated, particularly for non-citizens.

Finding the right property

Unless you’re intimately familiar with a given area, it’s a good idea to work with a U.S.-based real estate professional. In addition to knowing where the local bargains are, a broker or agent will be more familiar with the specifics governing real estate transactions (which vary from state to state), as well as the taxes, fees, and other costs you’re likely to incur.

In traditional snowbird destinations such as Florida and Arizona, there are many professionals who specialize in finding vacation properties for Canadians. Many of them will be familiar with reporting obligations that come with owning U.S. real estate, and can steer you toward legal and accounting professionals who specialize in cross-border transactions.

Finding the right mortgage (or not)

For Canadian residents, getting a mortgage from a U.S. bank isn’t always easy. Many U.S. lenders aren’t interested in extending credit to Canadian citizens; or they ramp up downpayment requirements and add additional fees associated with non-resident buyers.

One solution is to work with a Canadian bank that has an American affiliate. They’re familiar with Canadian customers, and will take your Canadian credit history into account. Another solution is to take out a home equity line of credit (HELOC) on your existing Canadian home to finance your purchase, or to simply to pay cash.

How do you want to own it?

Most Canadian municipalities give fee simple ownership of properties — that is, you hold title to both the land and the structures thereon in your name, or with a joint owner such as your spouse. When buying property in the U.S., however, other ownership structures may be more beneficial. They’re worth reviewing with a tax professional.

Direct ownership is by far the simplest way to own U.S. real estate. If you expect your worldwide estate to be under the current U.S. estate tax exemption limit ($5.34-million this year), it’s still probably the easiest way to own.

If your estate is larger, consider owning the real estate through a trust. This structure costs money to implement and maintain, but it can be an effective way to avoid U.S. estate tax. For the strategy to be effective, however, the trust will need to purchase the property from the get-go. So if you’re interested, talk to a legal professional well before your intended closing date.

If your goal is to earn rental income, owning real estate via a partnership may be worth exploring. While a partnership doesn’t always let you avoid estate tax, it does have tax benefits for capital gains. Another benefit of owning via a partnership (or in a trust) is the protection that structure offers from creditors: if a tenant slips and falls on your property, and then wins a lawsuit against you, he or she will not have any claim against your personal assets back in Canada.

To rent it out, or not to rent it out?

In large part, your exposure to U.S. tax depends on what you intend to do with your vacation property. If you don’t plan to rent it out in the off-season, there typically won’t be any additional filing requirements, because you’re not earning U.S. source income.

If you do rent it out, you’ll need to file form 1040NR, a U.S. non-resident income tax return. You’ll use the form to report gross income from the property, as well as various expenses you can deduct: insurance, utilities, property taxes, repairs, etc.

Keep in mind your tenants will be required to withhold 30% of their rent and remit it directly to the IRS. You may be able to apply this withholding tax against any expenses declared on your form 1040NR, but otherwise there is no reduction or exemption applicable to the 30% withholding rate.

Unlike Canada, U.S. tax law requires you to depreciate the value of your rental property (but not the land it sits on). The depreciation can be written off against income, which should lower your tax bill. To calculate your depreciation, take the value of just the building (land can’t be depreciated), and divide it by 27.5, the number of years the IRS sets as the useful life of a rental property.

Closing costs, taxes, and other fees

Much like back home, there are various closing costs and other fees associated with purchasing real estate in the U.S. Typical fees include a home inspection, a termite inspection, an appraisal, an escrow fee, title insurance, a county recording fee, and additional fees if the home is within a homeowners association.

Title insurance is one significant cost difference between buying real estate in the U.S. and Canada. It’s optional up here, but it’s required by nearly every bank providing mortgages in the U.S. It insures against title fraud or discrepancies on the title that could affect ownership.

Some states also have transfer taxes. These are typically paid by the seller, and vary from state to state, so you’ll need to check if they apply to you. In Florida, for example, transfer tax amounts to $7 per thousand dollars of property value. Arizona, on the other hand, has no transfer tax at all.

Operating costs

The two big additional costs of home ownership are property taxes and insurance. In some states, like Florida, property taxes for non-residents can be quite high. In other states, like Arizona, they are quite reasonable.

Home insurance is generally easy to obtain, but if your home is anywhere close to where hurricanes normally make landfall (Florida, the Gulf Coast, and certain parts of the Atlantic seaboard), expect to pay a hefty premium. In many parts of Florida, in fact, you won’t even be able to get insurance, or the rates will be so high that it’s actually cheaper to walk away after a natural disaster.

Selling (and paying taxes)

If you sell your U.S. property, you’ll need to file a U.S. income tax return and report any capital gain or loss on the property; and pay U.S. capital gains tax.

And, when you sell, the other party to the transaction (or the real estate agent and/or lawyer who’s mediating) will be obligated to withhold 10% of the proceeds and remit it to the IRS within 20 days of closing. Any withholding tax will be applied against any capital gain.

But, you can reduce or even eliminate this withholding tax by applying to the IRS for a withholding certificate. You’ll need to file the appropriate form in advance of the sale.

U.S. property and your estate

If you intend to pass on the vacation property in your will, you should give some thought to the U.S. estate tax. If your worldwide estate is less than the current year’s exemption limit (2014: $5.34 million), you won’t have anything to worry about.

The key word here is worldwide: Uncle Sam requires you to make the calculation based on all your assets, no matter where you hold them.

If you anticipate your estate is worth more than the $5.34-million limit, your estate may have to pay tax on the U.S. portion of your worldwide assets. The math can get a little complicated, but the bill can typically be offset by a special tax credit under the Canada-U.S. tax treaty.