My USA-based parents are buying a home in Canada. At around $290,000 CAD for the home, they are doing a down payment of approximately $90,000 CAD.
All of their accounts are U.S.-based accounts in USD. They're planning on doing a wire transfer at this point into a USD account at a Canadian bank (?), but I want to make sure they don't get hit in the currency exchange. What is the best way for them to change ~$70,000 USD into $90,000 CAD?
Wire transfer is clearly the best way to do the transfer. Their bank should be able to quote you what the fees and exchange rates would to wire CAD to a Canadian account. Compare against an operator like Transferwise. Remember to look all-in - how many US$ will you need to spend to get C$90,000 into the destination account? At the end of the day, it doesn't matter whether the money is going to a wire fee or a worse exchange rate.
CurrencyFair is currently quoting 90,000 CAD = 68,288 USD, which is half percent exchange rate charge, much better than the 3% to 5% your bank will charge. Could save you a couple thousand dollars.
If you use CurrencyFair, use your Canadian address, since they don't currently accept USA customers due to ornery American laws.
If you want to use USA address, TransferWise is quoting 90,000 CAD = 69,166.54 USD. fearless62 said: They're planning on doing a wire transfer at this point into a USD account at a Canadian bank If you decide to use TransferWise or CurrencyFair to save money, skip this step and wire or ACH the money to the exchanger, who will then send it to your CAD account.
I do suggest, if they haven't already, open a Canadian bank account. Expenses for the home will need to be paid in Canadian dollars. They'll probably also need a Canadian ITN number for non-residents (taxpayer ID number) if they don't have a social insurance number, for filing any tax returns in Canada.
As far as a bank, maybe look at Royal Bank and a linked account with RBC Bank USA. They can do transfers between the accounts online. The exchange rates are average. For large amounts they'll need to call to inquire about a better rate.
Ask the sending bank and receiving bank the fees at the same time. Sometimes it's cheaper to send XX in USD and you end up with more Canadian. Other times it's better sending in USD and letting the Canadian bank do it.
Tax ID is only required if they're renting the property, and they'll need a Canadian resident as a nominee (I forget the exact word) for the Canada Revenue Agency to docs to.
Buckmann said: If your parents are on the east coast, take a look at TD Bank. Specifically their Cross-Border offerings.
I'd echo exactly that, and also looking at RBC which has similar offerings. Having a CAD account and USD account that you can push funds between instantly is easy and cost effective. I've had similar setups with Citibank in the past during overseas job postings.
Just called our back office and our rate today is .7947, which would equal $71,523. Our fee is $45 and then you'd need to consider the receiving bank's fee. No, I can't help you with this transaction. Just posting an example.
If the following mortgage payments will also be in CAD, then you might have to come up with a long term solution, such as a Canadian mortgage company that works in USD, and maybe avoid the monthly $45 fee for wiring the mortgage payment.
I generally use xetrade for currency transfer from US to Canada. They can do ACH from US bank to extrade, to Canadian based bank account. For really large amount, you might want to do a bit more rate shopping. HSBC premier might be an option to keep rates relatively competitive (though they are a bureaucratic nightmare).
Just as a heads up, if you open a Canadian account and have over $10k in it for even a single minute, you will need to file a Fincen Form 114 Foreign Bank Account form. Massive penalties for not filing, up to 50% of the highest value in the account.
Rajjeq said: Just as a heads up, if you open a Canadian account and have over $10k in it for even a single minute, you will need to file a Fincen Form 114 Foreign Bank Account form. Massive penalties for not filing, up to 50% of the highest value in the account.
Easy-peasy. It's a PDF form you fill out with basic information about the account(s) that you then upload.
There's a different requirement for foreign deposits over $50K, but I'm not familiar with.
It is easy. But most people are not aware of it. Also, it must be received by the government by June 30th with no extension and is filed separately from your tax return, another reason why people miss it.
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