CAD to USD: Timing Your Miami Real Estate Purchase

How much does currency matter when buying Miami real estate as a Canadian? A 5% swing in the CAD/USD exchange rate changes the cost of a $500,000 USD property by approximately $35,000 to $40,000 CAD. On a $1 million purchase, that swing represents $70,000 to $80,000 CAD. Currency is not a minor consideration. It can be one of the largest variables in your total purchase cost.

This guide explains how currency impacts your Miami purchase, strategies for managing exchange rate risk, and practical approaches to timing your currency conversions. For the complete picture on buying Miami property, see our guide to buying Miami real estate as a Canadian.

How Currency Impacts Your Miami Purchase Price

When you buy US real estate as a Canadian, the purchase price is denominated in US dollars. You need to convert Canadian dollars to complete the transaction. The exchange rate at conversion directly affects your total cost.

Simple example:

Property price: $500,000 USD

The same $500,000 USD property costs anywhere from $625,000 CAD to $714,286 CAD depending on the exchange rate. That is an $89,286 difference based solely on currency timing.

Beyond the purchase price:

Currency affects every USD expense:

• Down payment
• Closing costs
• HOA fees (monthly)
• Property taxes (annual)
• Insurance (annual)
• Maintenance and repairs
• Property management fees
• Any US mortgage payments

If you hold the property for years and eventually sell, the exchange rate at sale affects your proceeds when converting back to CAD.

Historical CAD/USD Exchange Rate Trends

Understanding historical patterns helps set realistic expectations, though past performance does not predict future rates.

CAD/USD over the past decade:

Key observations:

1. The Canadian dollar has weakened over time. From relative parity with the USD in 2011-2012, the CAD has traded mostly between $0.70 and $0.80 USD for the past decade.
2. Oil prices matter. As an oil-exporting economy, Canada's currency tends to strengthen when oil prices rise and weaken when they fall.
3. Interest rate differentials matter. When US interest rates are higher than Canadian rates, capital flows to the US, strengthening the USD against the CAD.
4. Volatility is normal. Swings of 5-10% within a year are common. Larger swings during economic crises are possible.

What this means for buyers:

• Do not assume the CAD will strengthen. It might, but the long-term trend has been weaker.
• Plan for currency volatility in your budget.
• Perfect timing is impossible to predict.

Calculating the True Cost of Your Purchase

To understand your real cost, calculate everything in CAD at a realistic exchange rate.

Full purchase cost calculation:

Let us use a $600,000 USD condo with 25% down payment:

Annual carrying costs in year one:

Sensitivity analysis:

How does the exchange rate change your down payment cost?

A swing from $0.78 to $0.70 increases your down payment cost by $21,978 CAD. That is real money that could affect your purchasing power or budget for furnishing and renovations.

When is the Best Time to Convert Currency

The honest answer: no one knows. Currency markets are influenced by countless factors, and even professional traders cannot consistently predict short-term movements.

Factors that influence CAD/USD:

• Bank of Canada and Federal Reserve interest rate decisions
• Oil and commodity prices
• Economic growth differentials between US and Canada
• Trade policy and tariffs
• Political stability
• Global risk sentiment
• Inflation differentials

What you can control:

You cannot control exchange rates, but you can control:

• How you convert (bank vs. broker)
• When you convert (all at once vs. over time)
• Whether you hedge future conversions
• Your flexibility on purchase timing

Practical guidance:

1. If the rate is favorable by historical standards, consider converting more sooner rather than waiting for "better."
2. If the rate is unfavorable by historical standards, consider whether you can wait or convert gradually.
3. If you have a hard deadline (closing date), do not gamble. Convert or hedge in advance to ensure you have the funds.
4. Accept that you will not time it perfectly. Your goal is to get a reasonable rate, not the best possible rate.

Currency Hedging Options for Large Purchases

Hedging means protecting yourself against unfavorable currency movements. For a large real estate purchase, several options exist:

1. Forward Contracts

Lock in an exchange rate today for a currency conversion on a future date. If you know you need $200,000 USD in 60 days, you can lock in today's rate (or a rate close to it) for that future conversion.

2. Limit Orders

Set a target rate. If the market reaches that rate, your conversion executes automatically. Useful if you have flexibility and want to capture a favorable rate without constantly monitoring.

3. Market Orders

Convert at the current rate immediately. Simple but no protection against rate movements.

4. Gradual Conversion (Dollar-Cost Averaging)

Convert smaller amounts over time to average out rate fluctuations. Reduces the risk of converting everything at an unfavorable rate.

5. Currency Options

More complex instruments that give you the right (but not obligation) to convert at a certain rate. Typically used by businesses rather than individual buyers.

For most Canadian real estate buyers, forward contracts and gradual conversion are the most practical hedging approaches.

Forward Contracts Explained

A forward contract locks in an exchange rate for a future date. Here is how it works:

Example:

• Today's spot rate: 1 CAD = $0.73 USD
• You need $150,000 USD in 90 days for your down payment
• You enter a 90-day forward contract at $0.725 (forward rates differ slightly from spot rates)
• In 90 days, you convert $206,897 CAD into $150,000 USD at the agreed rate
• If the spot rate in 90 days is $0.70, you saved money
• If the spot rate in 90 days is $0.78, you paid more than you would have

Advantages of forward contracts:

• Certainty: You know exactly what you will pay
• Budgeting: No surprises at closing
• Peace of mind: No need to monitor rates constantly
• No upfront cost (in most cases)

Disadvantages:

• You miss out if rates improve
• Obligation to complete the contract (or pay penalties)
• Forward rates include a spread that may be slightly worse than spot
• Requires working with a currency broker or bank that offers forwards

Who should consider forward contracts:

• Buyers with a fixed closing date
• Those who cannot afford currency risk
• Anyone who prefers certainty over speculation
• Buyers whose budget is tight at current rates

Who might skip forward contracts:

• Buyers with flexible timelines
• Those with significant buffer in their budget
• Anyone comfortable with currency risk
• Cash buyers who can convert opportunistically

Working with Currency Exchange Services

You do not have to convert currency through your bank. Specialized currency exchange services often offer better rates and more options.

Types of currency service providers:

1. Banks (RBC, TD, BMO, etc.)

Familiar and convenient but typically offer the worst exchange rates. Banks build significant spreads into their rates.

2. Online Currency Brokers

Companies like Wise (formerly TransferWise), OFX, Knightsbridge, XE, and others specialize in currency transfers. They typically offer rates 1-3% better than banks.

3. Foreign Exchange Specialists

Firms that focus on large transfers for real estate, business, and investments. May offer personalized service, forward contracts, and better rates for large amounts.

What to look for in a provider:

• Exchange rate (compare to mid-market rate)
• Fees (transfer fees, conversion fees)
• Transfer speed
• Minimum and maximum amounts
• Forward contract availability
• Customer service and support
• Regulatory licensing (ensure they are legitimate)

Questions to ask:

1. What is your exchange rate for CAD to USD right now?
2. How does that compare to the mid-market rate?
3. What fees apply to my transfer?
4. How long will the transfer take?
5. Do you offer forward contracts?
6. What is your minimum/maximum transfer size?
7. Are you licensed and regulated?

Bank vs Broker Exchange Rates Compared

The difference between bank and broker rates can be substantial on large transfers.

Typical rate comparison:

Cost difference example:

Converting $200,000 CAD to USD:

By using an FX specialist instead of a bank, you could save over $3,600 on a single $200,000 transfer. On a full real estate transaction involving multiple transfers, savings add up quickly.

Why banks charge more:

Banks are not in the business of offering competitive exchange rates. Currency conversion is a profit center. They rely on convenience and customer inertia. You can do better by shopping around.

Timing Your Down Payment Transfers

Real estate transactions have specific deadlines. Here is how to time your currency conversions:

Typical purchase timeline:

1. Initial deposit (upon contract signing): Usually 5-10% of purchase price
2. Due diligence period: 10-15 days
3. Additional deposits (if applicable): Various schedules
4. Final closing: 30-60 days after contract

Strategy for each stage:

Initial Deposit:

You need certainty here. The deposit is due quickly after signing. Options:

• Have USD already in a US account
• Use a wire transfer with a broker (2-3 business days)
• Use a forward contract if you signed a purchase agreement in advance

During Due Diligence:

If you are still in due diligence and might walk away, do not convert your entire closing amount. Convert only what is committed.

Before Closing:

Convert remaining funds 5-7 business days before closing to ensure they arrive on time. Wire transfers can take 2-3 business days, and you want buffer for any delays.

Practical tips:

1. Open a USD bank account before you need it
2. Test your transfer process with a small amount first
3. Keep copies of all transfer confirmations
4. Have your title company's wire instructions verified carefully (wire fraud is a real risk)
5. Do not wait until the last minute

Ongoing Currency Costs for Rental Income

If your Miami property generates rental income, currency affects your ongoing returns.

Monthly conversion decisions:

Your rental income arrives in USD. You have choices:

• Leave it in USD for future expenses
• Convert to CAD monthly
• Convert to CAD periodically when rates are favorable
• Accumulate for a larger conversion

Example:

Monthly rental income: $3,000 USD

A weaker Canadian dollar actually helps your rental income when converted to CAD. The same $3,000 USD becomes more Canadian dollars.

Strategy for rental income:

1. Keep a USD account for property expenses (HOA, taxes, repairs, management fees)
2. Only convert what you need to bring back to Canada
3. Consider timing if you have flexibility
4. Track exchange rates for tax reporting purposes

Tax Implications of Currency Fluctuations

Currency matters for Canadian taxes. The CRA requires you to report foreign income and calculate gains in Canadian dollars.

Rental income:

Convert rental income to CAD at the exchange rate when received (or use the annual average rate for simplicity). Both the income and expenses should be converted consistently.

Capital gains:

When you sell, your capital gain for Canadian tax purposes is calculated in CAD:

1. Convert your purchase price to CAD at the exchange rate when you bought
2. Convert your sale price to CAD at the exchange rate when you sold
3. The difference (minus expenses) is your Canadian capital gain

Currency gains and losses:

A currency gain or loss can occur separate from the property gain:

Example:

• Bought for $500,000 USD when CAD was at $0.80 (cost basis: $625,000 CAD)
• Sold for $600,000 USD when CAD was at $0.70 (proceeds: $857,143 CAD)
• USD gain: $100,000 (20%)
• CAD gain: $232,143 (37%)

The currency movement increased your Canadian tax bill beyond what the USD gain would suggest.

Conversely:

• Bought for $500,000 USD when CAD was at $0.70 (cost basis: $714,286 CAD)
• Sold for $550,000 USD when CAD was at $0.80 (proceeds: $687,500 CAD)
• USD gain: $50,000 (10%)
• CAD loss: $26,786 (-4%)

You made money in USD but lost money in CAD terms due to currency movement.

Record keeping:

Track and document:

• Exchange rates at time of purchase
• Exchange rates for each expense (improvements add to cost basis)
• Exchange rates for each rental income receipt
• Exchange rates at time of sale

For detailed tax guidance, see our Canadian tax guide for Florida property.

Practical Strategies for Canadian Buyers

Here are actionable approaches to managing currency risk:

Strategy 1: Accept the Rate and Move On

If you find the right property at the right price, do not let currency paralysis stop you. Convert at a reasonable rate through a broker (not a bank), close the deal, and focus on enjoying your property. Trying to time currency perfectly adds stress and often does not work.

Best for: Buyers focused on finding the right property who have budget flexibility.

Strategy 2: Gradual Conversion

If you are planning to buy in 6-12 months, start converting CAD to USD in regular increments. Convert a set amount each month or quarter. This averages out your exchange rate and reduces the risk of converting everything at a bad time.

Best for: Buyers with a longer timeline who want to reduce timing risk.

Strategy 3: Target Rate with Limit Orders

Set a target exchange rate that you would be happy with. Place a limit order with a currency broker to convert automatically if the market reaches that rate. Be realistic. Setting a target of $0.85 when the rate is $0.73 may never execute.

Best for: Buyers with flexibility who want to capture favorable rates without constant monitoring.

Strategy 4: Forward Contract for Certainty

Once you have a signed purchase agreement and closing date, lock in your exchange rate with a forward contract. You will know exactly what your purchase costs in CAD, regardless of what happens in currency markets.

Best for: Buyers who need budget certainty, those with tight margins, and risk-averse individuals.

Strategy 5: Maintain USD Holdings

If you have ongoing income in USD, investments in USD, or plan to spend time in the US, consider maintaining a larger USD balance. This reduces the need to convert at any specific time and gives you flexibility.

Best for: Buyers with USD income sources or frequent US travel.

What NOT to do:

• Do not gamble your entire purchase on currency speculation
• Do not wait indefinitely for a "better" rate that may never come
• Do not use your bank for large conversions without comparing alternatives
• Do not forget to factor currency into your total budget
• Do not ignore currency when calculating your investment returns

Frequently Asked Questions

How does a 5% currency swing affect a $500,000 purchase?

At an exchange rate of $0.75 CAD/USD, a $500,000 USD property costs $666,667 CAD. At $0.70 CAD/USD (about 7% weaker), the same property costs $714,286 CAD. That is $47,619 more. A 5% swing in the opposite direction (to $0.79) would cost $632,911, saving $33,756.

Should I wait for a better exchange rate?

Maybe, but no one can predict currency movements reliably. If the property is right and the price is right in USD terms, waiting for currency improvement is speculation. Consider hedging or gradual conversion instead of waiting indefinitely.

What is the best way to transfer money for a real estate purchase?

Use a specialized currency broker rather than a bank. Compare rates from several providers. For large amounts, negotiate for better rates. Use wire transfers for the actual money movement. Allow 3-5 business days for transfers to complete.

Can I get a mortgage in USD as a Canadian?

Yes. Several options exist: Canadian banks with US operations (RBC, TD, BMO), US lenders who work with foreign nationals, or borrowing against Canadian assets (HELOC). See our Canadian buyer's guide for details.

How do I report currency gains on my Canadian taxes?

Your capital gain is calculated in CAD, which includes any currency gain or loss. Convert purchase price to CAD at the rate when you bought, and sale price at the rate when you sold. The CRA requires Canadian dollar reporting for all foreign transactions.

Should I keep rental income in USD or convert to CAD?

It depends on your needs. Keeping USD in a US account makes sense if you have ongoing USD expenses (HOA, taxes, repairs). Only convert what you need to bring back to Canada. This gives you flexibility to time conversions favorably.