Tax tips for Canadians with US vacation homes or investment properties

If you own a vacation home or investment property in the USA, you have multiple issues to address:

  • Investment income from the property. If you are renting out an investment property in the USA you are required to file a 1040NR return. This return is due on June 15th.  All federal and state taxes paid to the USA can be claimed as a foreign tax credit on your Canadian return.


  • Capital gains on the sale of the property. US law requires the withholding of 10% of the gross proceeds of any sale of real estate. There are forms that can be filed to reduce the withholding. If there are any sales proceeds withheld, they can be refunded through the filing of a 1040NR return.


  • Estate tax exposure on US assets. All US assets are considered part of your asset base for estate tax purposes. Ownership of real estate can subject you to federal and state estate taxes on any US assets. This exposure can be reduced by structuring the purchase of the property through an entity, rather than purchasing the property directly.


If the above situations apply to you or to someone you know, don’t wait until it is too late to properly plan your affairs. Make an appointment with us at Nathan Farkas and Associates to plan your way forward with reduced tax exposure.


You can reach us by phone or fax at 1 (800) 905-0380 or use our contact form to email us.


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