Are you interested in investing in real estate in the United States? Whether it is for your family, retirement, investment or a rental vehicle for extra income, Canadian citizens can buy real estate in the United State without any major restrictions.

Can a Canadian corporation purchase US property?

By owning real estate in the US, a Canadian corporation will be deemed to be doing business in the US and must file IRS Form 1120-F: US Income Tax Return of a Foreign Corporation on an annual basis. In summary, we do not recommend purchasing US real estate through a Canadian corporation.

How is rental property income taxed in Canada?

In most cases, rental income is considered to be personal, other income when filing your taxes in Canada. If you are collecting rental income through a business or through property management, however, the money should be considered to be self-employment income rather than other income.

Is there a way for Canadians to own US real estate?

Canadian Corporations – Some Canadians own U.S. real estate through a Canadian corporation. Again, this structure has pros and cons that need to be understood and analyzed. Personal Ownership – There are a number of options for Canadians to own U.S. property personally, with each option having its own pros and cons: In your name alone

How is Canadian rental property taxed in US?

Generally, the U.S. tax cost basis subject to depreciation of a foreign rental property is the lower of: Fair market value (FMV) on the date the property is placed into service for U.S. tax purposes For a lot of our Canadian ex-pat clients, given the housing booms back home, the FMV of the property is not usually applicable.

Which is the best structure to own real estate in Canada?

It’s important to be aware that many Canadians have been incorrectly advised that an LLC is the best structure for them to own U.S. real estate. While an LLC may be a good vehicle for Americans to own real estate, it is often not a good option for Canadians.

What happens when you sell real estate in Canada?

When a Canadian sells U.S. real estate, the transaction will trigger U.S. income tax filings. This is the case if the property is owned for personal use, or as a rental property. For rental properties, this concept would be straight forward in that you were in business with Effectively Connected Income ( ECI) all along.