Purchasing US Real Estate through a Canadian Corp

[alpha]

Anyone have experience purchasing US rental property through a Canadian based corporation?

 

My corp already has an IRS tax ID for B2B transactions but I have always filed the various tax treaty forms to pay the corp income tax in Canada for these sales.

 

My initial research suggests rental income would not fall under the treaty and require the corp to file taxes in the US and possibly create a dual taxation issue? Is this correct? Any tips from someone who has done this would be appreciated. Thanks

[bizaro86]

When I looked into this the recommendations I received were to either buy personally or have your Canadian corp fund a US subsidiary. YMMV, and it was ~10 years ago when I looked into this, so things may have changed...

[Parsad]

When I looked into this the recommendations I received were to either buy personally or have your Canadian corp fund a US subsidiary. YMMV, and it was ~10 years ago when I looked into this, so things may have changed...

 

Same thing when we looked at buying real estate in the U.S. back in 2008 after the financial crisis...essentially, when you ran the tax consequences on the gains upon a sale, you ended up paying tax twice. 

 

If you bought the property in your personal name or retained it all in a U.S. subsidiary, then you were only taxed once...but if you brought the funds up through the subsidiary to the parent company in Canada, it defeated the purpose as you ended up taxed twice again.  I think the same issue also occurred if you set up an LP or LLC. 

 

That was 11 years ago, so maybe there are changes or loopholes that make it more viable.  Cheers!

[bizaro86]

Sounds like we had the same experience. I looked at apartments and condos in Phoenix in 2009. In retrospect, letting the tax situation deter me from buying was a mistake...