I'm a Snowbird and I Just Bought a Florida Condo. Does That Change My Taxes? Not Your Residency, but Five Other Things

Owning property in the US does not make anyone a US tax resident; days do. A snowbird who buys the condo they used to rent has the same residency position the day after closing as the day before. What the purchase changes is the estate picture (the condo is a US-situs asset), the property tax (a non-resident pays the non-homestead rate with the 10% cap, not the homestead rate with the 3% cap), the probate picture (a Florida asset passes through Florida probate unless titled to avoid it), and, if the condo is rented for any part of the year, the US and Canadian filings that a rental brings. The day count, meanwhile, keeps running exactly as before.

Key takeaways

• Residency: no change. The substantial presence test counts days, not deeds. A snowbird who spends the same four months in the condo they own as they did in the one they rented has the same count and the same Form 8840 position.
• Estate tax: new exposure. The condo is US-situs property; a Canadian's estate above $60,000 of US-situs assets files Form 706-NA; the treaty proration eliminates the tax for most, but the return is required to claim it.
• Property tax. No homestead exemption for a non-resident (the exemption requires Florida permanent residence); the condo is assessed at market with the 10% annual cap on non-homestead increases; the millage is the same.
• Probate. A personally titled Florida condo passes through Florida probate on the owner's death; a revocable trust, joint ownership with survivorship, or an enhanced life estate deed avoids it.
• Rental. If the condo is rented for fewer than 15 days, the 14-day exclusion applies in the US and Canada taxes the rent; 15 days or more brings the 871(d) election, a 1040-NR, personal-use allocation, Florida transient taxes, and platform withholding; either way the T776 in Canada and, if the owner's foreign property exceeds $100,000 at cost and the condo is rented, the T1135.
• Not rented, not T1135: a condo used only personally is personal-use property and is excluded from the T1135.

Residency

The substantial presence test is a day count: current-year days plus one-third of last year's plus one-sixth of the year before. Owning the condo changes nothing in the formula. A snowbird at 120 days a year meets the test in the third year and files Form 8840 (closer connection to Canada) annually to remain a non-resident; one at 183 or more days in a year is a resident unless the treaty tie-breaker applies. The condo can be evidence in a closer connection analysis (a permanent place of abode in the US), but the exception turns on the tax home and the closer connection as a whole, and a Canadian home, family, licence, health coverage, and financial life outweigh a winter condo. The same is true for the treaty's permanent home test: the condo is a permanent home in the US, so a snowbird with a Canadian home has one in each, and the centre of vital interests decides (Canada).

Estate tax

The condo is US-situs property. Under domestic US law a non-resident alien's estate owes estate tax on US-situs assets above $60,000; under Article XXIX B(8) of the treaty the estate claims a prorated share of the full US exemption (about $15 million) equal to the US-situs share of the worldwide estate. A $500,000 condo in a $3 million estate gets $2.5 million of exemption; no tax. The estate must file Form 706-NA within nine months of death to claim it; the return is the whole benefit. A married owner also has the treaty's marital credit. Canada taxes the deemed disposition of the condo on the final T1 (rolled to a spouse if applicable), with a credit for any US estate tax on the condo.

Property tax

Florida's homestead exemption (up to $50,000 off assessed value, the 3% cap on annual assessment increases, and portability) requires the owner to be a Florida permanent resident on January 1. A Canadian snowbird is not, and claiming it (some do, on a Florida driver's licence) is a fraud that Florida pursues and that also creates a residency fact the CRA can read. The condo is assessed at market with the 10% non-homestead cap; the tax bill is the same millage applied to the higher base. Condo association fees and the Florida insurance market are the other carrying costs.

Probate

A Florida asset in the owner's name passes through Florida probate: a court process requiring a Florida personal representative (or a qualifying relative), Florida counsel, and months. Avoidance: title the condo in a Florida revocable living trust (the same tax result as personal ownership; the successor trustee transfers on death), hold it jointly with right of survivorship with a spouse (the survivor takes; the estate tax contribution rule applies), or use an enhanced life estate deed naming the beneficiaries. The Canadian will should be coordinated so its revocation clause does not undo the Florida arrangement.

If the condo is rented

Fewer than 15 rental days: the 14-day exclusion; no US income tax; the platform withholds and a 1040-NR recovers it; Canada taxes the rent on T776. Fifteen or more days: the 871(d) election on a 1040-NR, personal-use allocation of expenses, the loss cap, W-8ECI and an ITIN to the platform, Florida's 6% state tax and county tourist tax on every night (collected by the platform), a DBPR vacation rental licence, the condo association's rules, and the Canadian T776 with a credit. The T1135 applies if the owner's foreign property (including the rented condo at cost) exceeds $100,000.

A condo never rented produces no US filing and is personal-use property excluded from the T1135.

Worked example

A Hamilton couple who have wintered in Sarasota for six years buy a $450,000 condo, use it January through April, and do not rent it. Their worldwide estate is $2.8 million.

• Residency. 120 days a year; test met since year three; Form 8840 every year; unchanged.
• Estate. $450,000 of US-situs property; proration: 16% of $15 million = $2.4 million of exemption; no tax; Form 706-NA on the first death; marital credit available.
• Property tax. Non-homestead; 10% cap; no exemption.
• Probate. They title the condo in a Florida revocable trust with each other and the children as successors; the Ontario will's revocation clause is limited to Ontario property.
• Rental. None; no 1040-NR; no T1135 (personal-use property).
• Next winter. If they rent it for two weeks in November: 14-day exclusion; Airbnb withholds; 1040-NR to recover; Canada taxes the rent; the condo goes on the T1135.

Official sources

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

"If the date of death value of the decedent's U.S.-situated assets, together with the gift tax specific exemption and the amount of the adjusted taxable gifts, exceeds the filing threshold of $60,000, the executor must file a Form 706-NA." — Internal Revenue Service, Estate Tax for Nonresidents not Citizens of the United States, https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states

"There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses." — Internal Revenue Service, Topic No. 415, Renting Residential and Vacation Property, https://www.irs.gov/taxtopics/tc415

Practitioner note

Buying the condo changes the estate and probate picture and nothing about residency. The two things we do the month a snowbird client closes: title the condo to avoid Florida probate, and note the estate's Form 706-NA requirement in the file so the executor claims the proration. The day count continues as before, and so does Form 8840.

See also: For the full sequence of a Canadian move to Florida, see the Canada-to-Florida tax guide, and browse every cross-border tax topic guide, organized by situation.

Next step

Fairlight prepares the estate tax proration and Form 706-NA planning, the probate-avoidance titling with Florida counsel, and the day count and Form 8840 each year. See cross-border pricing or book a call.