U.S. “Retiree Visa” Plan, No Big Deal for Snowbirds

A legislative proposal that would allow Canadian and other foreign retirees to live in the U.S. up to 240 days a year—58 more than currently allowed—has little to offer snowbirds, even those who could afford the $500,000 price tag that comes along with it. The devil is in the details.

The bill, introduced last week by Senator Chuck Schumer (D-NY), and Senator Mike Lee (R-Utah), would grant foreign nationals who invest at least $500,000 in residential real estate (of which at least $250,000 must be for a primary residence) a visa to live in the U.S. for at least 180 days a year and would be renewable every three years. Canadians, who are already allowed to visit in the U.S. for up to 182 days per year, would be allowed up to 240 days.

The homebuyer provision is part of a larger VISIT USA Act, designed to boost foreign travel and investment in the U.S. and has been endorsed by the U.S. Chamber of Commerce, the U.S. Travel Association, and the American Hotel & Lodging Association. The homebuyer provision is specifically designed to appeal to Canadians and Chinese who already pump billions into the U.S. residential real estate market.

Now the fine print:

The visa would be available to Canadians over 50 (with benefits covering spouses and minor children), but would not allow them to work, would not be considered a path to citizenship, and would not qualify them for benefits such as Medicare, Medicaid or Social Security. It would also require them to pay taxes to the IRS, even on foreign earnings, just as U.S. citizens are required to do.

The homebuyer provision would also require purchasers to pay cash for the property (no mortgage or home equity loan allowed) and the property would have to be bought for more than its appraised value. If the purchasers re-sell the home, they would lose their visa.

(According to the Wall Street Journal, international buyers accounted for approximately $82 billion in the U.S. residential market for the year ending in March, the greatest share of that being spent in Florida. The National Association of  Realtors estimates that over the past year, Canadians accounted for one quarter of all foreign home buyers in the U.S., with buyers from China, Mexico, the U.K., and India accounting for another quarter.)

Under existing rules, Canadians are allowed to visit in the U.S. up to 182 days per calendar year without any visa or  home ownership provision. And if they can prove a “closer connection” to Canada, which they can do by routinely filing an IRS 8840 form, they don’t have to file a tax return with the U.S. unless they actually earn money on investments or rental property or property sales in the U.S.

One of the biggest down sides of the proposed visa offer, however, is that Canadians who live out of their  province for more than 182 days (212 in Ontario and 243 in Newfoundland)  can lose their medicare benefits and end up without health insurance. Since they don’t qualify for U.S. Medicare, they would have to find private health insurance, which in the U.S. is generally not available to non-permanent residents, or is prohibitively expensive.

They might qualify for international expatriate insurance—which is available in the Canadian market—but it too has limitations and is not as comprehensive as provincial medicare.

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