US real estate: tax tips for Canadians

2 years ago

If you’re a Canadian and you’re planning to buy real estate in the United States, there are some important tax rules you should know about. In fact, this real estate tip applies to any non-US citizen buying property in that country. In short, you need to tell the IRS about any property purchases.

Explains H&R Block:

You must file a return for the property even if it’s only for personal use if you are in the United States for a certain number of days.

You should complete a substantial presence test calculation and determine if you need to file an 8840 Closer Connection Statement or 1040 return.

If you are renting the property, you must report the income in both Canada and the U.S.

You are required to complete a U.S. 1040NR every year to report your rental income.

As well, under the U.S.-Canada Tax Treaty, rental income is subject to a 30% withholding of the gross rent in the U.S. But you can make a one-time election that would allow you to pay tax on only the profit.

As the Canadian dollar continues to gain in value compared to the US greenback, there are more Canadians than ever before considering buying property south of the border. But there are serious tax implications.


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