Summer is here, and if you’ve ever come back from a vacation saying, “I could see myself living here,” you’re not alone. More and more Canadians, especially those nearing retirement, are looking into owning a vacation home in another country.

Whether it’s a beachside condo in Florida, a stone cottage in Portugal, or a cabin in Costa Rica, owning property abroad can be exciting. But before you dive in, it’s important to understand what you’re really signing up for, especially when it comes to taxes, legal rules, and long-term planning.

The Appeal

Let’s start with the good stuff.

Owning a vacation home abroad can be a dream come true. You get a place to escape the Canadian winters, the potential to earn rental income when you’re not using it, and you may even build long-term wealth if the property value goes up.

It can also be a great lifestyle investment, something you enjoy now that may eventually become part of your retirement plan.

 What You Might Not Know

Here’s where things get a bit more complicated, but not unmanageable.

1. You still have to pay taxes in Canada.
Even if your property is overseas, Canada taxes you on your worldwide income. That means if you rent out your vacation property, you’ll need to report that income to the CRA.

2. If it’s worth over $100,000 CAD, you’ll have extra paperwork.
This includes filling out something called a T1135 form, used to report foreign assets. Missing this can lead to big penalties, even if the property isn’t generating income.

3. When you sell, there are tax consequences.
If the property grows in value, you’ll likely owe capital gains tax in Canada—and possibly in the country where the property is located.

4. Estate planning gets trickier.
If something happens to you, there could be additional taxes or rules in the other country around inheritance or estate transfer, especially in the U.S., where estate tax could apply even if you’re not a citizen.

Risks to Consider

Aside from taxes, here are a few other things you’ll want to think through:

• Foreign ownership laws – Not every country welcomes foreign buyers without restrictions or extra taxes.
• Currency risk – If the local currency swings against the Canadian dollar, your costs—or rental income—might not stretch as far.
• Legal complexity – Real estate laws are different everywhere. It’s essential to work with local legal experts who understand the market.
• Residency issues – Spending too much time in the U.S., for example, could make you a “tax resident” there, which comes with a whole new set of filing rules.

Tips if You’re Thinking of Buying

If this is something you’re seriously considering, here are a few ways to protect yourself:

• Keep detailed records – Track what you paid, what you earn, and what you spend on maintenance or upgrades.
• Work with a cross-border advisor – Taxes and estate planning are very different when another country is involved.
• Understand the exit plan – How easy will it be to sell the property one day? What taxes will apply?
• Know the treaty rules – Canada has tax treaties with many countries. These can help you avoid being taxed twice, but only if you file everything correctly.

Final Thoughts

Owning a vacation property abroad can be a fantastic way to enhance your lifestyle, create memories with family, and even build wealth. But it’s not as simple as buying a cottage a few hours outside Halifax.

There’s more paperwork, more planning, and more potential pitfalls.

But with the right advice and a little due diligence, you can absolutely make it work.

So, if you’re sipping sangria in Spain or walking a beach in Barbados this summer thinking “I’d love to own a place here”, just make sure your financial plan is coming along for the ride.

^{*The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written by Rick Irwin, for the benefit of Rick Irwin, Mutual Fund Representative with Trinity Wealth Partners, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.}