One of the most important parts of investing across the border is setting up the right structure and understanding taxes.
Why Structure Matters
If you purchase U.S. property personally, you open yourself to double taxation and liability exposure. Instead, Canadians often invest through U.S. LLCs (with special planning) or limited partnerships to protect themselves.
Cross-Border Taxation
Income from U.S. rentals is subject to U.S. federal tax, state tax (depending on the location), and must also be reported in Canada. The good news is that tax treaties between the U.S. and Canada can help avoid double taxation—but only if set up correctly.
Withholding and Compliance
The IRS requires withholding on rental income and sales proceeds for foreign investors unless you file the proper elections and paperwork. Missing these steps can cost thousands.
Professional Guidance
The smartest move any Canadian investor can make is working with accountants and attorneys who specialize in cross-border transactions. What you save in taxes and risk usually outweighs the cost many times over.