The big plan (Canada/SA/travel) and tax

[Falconer]

Hi all,

Since I have started to get my investments and money into order I am starting to think about that to do with myself when I have reached FIER. I am looking at retiring at the age of 40, I am now 27. Currently working and living in Abu dhabi doing a job I love and I am very lucky in having to work relatively little So I am not in too much of a hurry to retire early, as I already feel like I am retired to a certain degree.

But when I do so I always had this Idea of splitting my year between different parts of the world. This is predominantly to give me the opportunity to practice my hobby to the maximum.

I would like to spend 4-5 month a year in Canada (Alberta) and 4-5 month in South Africa. The remaining month I would like to travel and visit family in Germany.

In both South Africa and Canada I would like to buy a house that I can rent out to tourists during the month I am not staying there.

Since I am planning on investing into properties anyway I would like to buy these properties in the years before my retirement and rent them out.

In South Africa I already have a fair Idea where I would like to buy the property. In Canada I am looking at the area around Calgary.

Where would I have to pay tax if at all?

Where should I get my health insurance?

Does anyone else have such a three way split lifestyle? and If so what are your experiences with it?

kind regards
Moritz

[Ipodius]

Interesting plan! As a native of South Africa and a big fan of Canada (visited a few times, best friend from high school lives in Montreal) I can see the appeal of both places :)

In terms of taxes, SA and Canada do have a dual taxation agreement, so that should make things a bit easier:
http://www.treaty-accord.gc.ca/text-texte.aspx?id=102407

However, you'll need to talk to a tax adviser to find out exactly what the situation will be - I'm guessing it will depend on where your retirement savings are based.

In terms of SA property, where are you hoping to buy? This will have an impact on your ability to rent it out while you are not at the property. Short term holiday rentals (1 week to a couple of months) are very possible at the coast or at other tourist hot-spots (Drakensberg, near Game Reserves, etc). But, in other areas (JHB / Pretoria) it's a lot harder to do that kind of short term rental.

Health insurance is a tough one. On the one hand, SA has really cheap health insurance that gives you access to world class private health care for in-hospital treatment. Out of hospital (ie day to day costs, visiting GPs, etc) are also very cheap, unfortunately their aren't the same options as in some other countries for getting those expenses taken off your SA taxes (you can claim medical expenses, but the limit is so low that my health insurance maxes it out before I spend a cent on day to day expenses. However, I don't know if such a policy would cover you for the seven months a year you are in Canada and travelling. From my own travels, I know a combination of travel insurance + my normal health insurance provided me with good coverage, but that was for time periods of 4 to 6 weeks. You would need to investigate what would be the case if you where spending 50% of your time outside of SA. Of course, Canada also has a publicly funded health care system, so it's worth investigating what you would need to do to qualify for coverage.

Hope that helps!

[Falconer]

Hi,
thanks for the great reply.

My investments will be based in the UAE mainly, as there are no taxes here. And they would stay there, I would use my debit card to pay for things or withdraw cash from ATMs as and when I need. So I don't see a reason to move any money to either Canadian or SA accounts. You are right I probably will have to consult an international Tax adviser.

I spend 3 month in the Dullstrom area in 2010 and loved it there. So I am looking at buying a property there. It is a big tourist area for people that do fly fishing and on the way to Krueger. So I am pretty confident I could rent it out most of the year. But I am open to changing my mind if I find a better area. The most important thing is that I need to be able to follow my hobbies and my SO can follow hers.

kind regards
Moritz

[Ipodius]

Dullstroom is beautiful, lovely part of the country :) Also a pretty cost effective place to live - property is cheap!

In terms of renting it out, I think it would be better than JHB / Pretoria but worse than the coast. You'd need to find a local holiday rental agent and sound them out on what kind of occupancy you could expect, what kind of fees and expenses you would have, and how much you could rent it out. But having said that, the property is so cheap in that area that you could even leave the house empty half the year. The rental income won't be huge in SA, while for the Canadian property renting it out will be more of an issue.

With the UAE being tax free that sounds like the place to keep your investments. 

So what are your hobbies? Fly-fishing?

My dream lifestyle would be 9 months of the year in SA and then three months of the year skiing in the US / Canada / Europe / South America / New Zealand.... something to aspire to!

[YK-Phil]

Hi all,

In South Africa I already have a fair Idea where I would like to buy the property. In Canada I am looking at the area around Calgary.

I have a more or less similar plan, which is to keep a small place in Canada and spend 6-7 months here (very likely a "big" tiny house on one of the Gulf Islands off Nanaimo) and spending 4-5 months a year abroad where the cost of living is low and the quality of life is high (likely contenders: Spain, Portugal, Mexico, SE Asia). I originally wanted to buy a cheap property in Spain or Mexico, but decided against it. Instead, looking at what I could get for $700-800/month almost anywhere in the world, we opted for renting while overseas and keep our stash fuller a little longer.

I just have one question about your choice of Calgary. I live in Calgary, and I like it for many reasons, but that's not where I would want to spend my retirement years. The cost of real estate is up the roof, and aside from the clean and pure air and the mountains to the west, there isn't much to do here on the cultural scene, and while there are world-class restaurants, the city is full of people making big bucks, and as a result, I can't blame restaurants for charging $100 for a plate of tapas you'd pay $20 elsewhere.

[Falconer]

So what are your hobbies? Fly-fishing?

My dream lifestyle would be 9 months of the year in SA and then three months of the year skiing in the US / Canada / Europe / South America / New Zealand.... something to aspire to!

No fly fishing is not my hobby. I had a go at it, but it never really got me going. I am a falconer. Aka I train and hunt with birds of prey. So I require a certain typ of landscape in order to practice the sport.

I just have one question about your choice of Calgary. I live in Calgary, and I like it for many reasons, but that's not where I would want to spend my retirement years. The cost of real estate is up the roof, and aside from the clean and pure air and the mountains to the west, there isn't much to do here on the cultural scene, and while there are world-class restaurants, the city is full of people making big bucks, and as a result, I can't blame restaurants for charging $100 for a plate of tapas you'd pay $20 elsewhere.

Like I said above I am a falconer and the area around Calgary is pretty good for flying falcons to a very high standard. So I don't really care about what Calgary has to offer other than that it is a better than Saskatchewan. Where the hunting is even better but my SO would not be happy living at all. Plus I don't think many tourists come there.

I would not want to live in Calgary it self but a little outside in order to get cheaper properties.

Falconry season in Canada is in the Autumn and winter, so I would be able to rent out the property during the summer and spring.

The same goes for SA, the falconry season during the southern hemispheres winter, so during the summer I can rent out the property.

In regards to SA the location might change yet, as I am working on a work related project that might supply me with the accommodation and flying ground free of charge. I actually earn a living with falconry, so I can always make extra money even when retired.

My SO is a keen horse rider so I am thinking of working that into the plans. As much as I love falcons she loves horses and it would not be fare to withhold that from her.