CANADIANS WITH U.S. REAL ESTATE

Whether you own or plan to make an investment in United States real estate, you must understand the cause & effect of being Canadian.  You need to understand how you own U.S. property has both Canadian and U.S. tax & legal consequences.  You can count on our experience and expertise to help you navigate the cross border real estate transaction and understand the tax and estate planning issues.    

The Estate Tax is a tax by the United States government on your right to transfer property at your death.  It consists of an accounting of everything you own or have certain interests in at the date of death.  For non-residents, non-citizens, it consists of property that is situated in the United States, such as bank and investment accounts with U.S. financial institutions, real estate (including boat slips), insurance, trusts, annuities, business interests and other assets.    

Unlike Americans, who are not subject to Estate Tax under $5,000,000 (adjusted for inflation), Canadians, like all non-domiciled foreign citizens, are subject to Estate Tax on the fair market value of property situated in the United States on death exceeding $60,000.     

Without advance planning, a Canadian with assets situated in the U.S., including real estate, may experience a number of tax & legal issues during his or her lifetime and upon death.  We review each client’s specific situation in order to advise and implement a cross border estate plan.  

There is no one way to own U.S. property.  It all depends on the facts and circumstances of each client and, for example, on whether the property is for personal use or a rental investment.    

We can work with you and your advisors by providing guidance on the proper structure for the purchase of U.S. property in order to effectively take the U.S. estate and gift tax and transfer upon death into account in your overall estate plan.

If you’re thinking of selling your U.S. property, you need to understand the implication before you sign on the dotted line. Your U.S. based realtor, real estate lawyer and/or escrow officer may not understand the issues that affect your sales transactions as a non-resident alien. Under the Foreign Investment in Real Property Tax Act (FIRPTA), the IRS requires buyers of U.S. property from foreign sellers to withhold 15% of the gross sales proceeds at closing and remit them to the IRS. This is required even if you have no gain on the sale, or even a loss! However, with the right counsel, you can take steps to reduce or eliminate the withholding altogether.    

Whether you are a Canadian resident that owns property in the United States or you live in the United States, we can prepare your wills, power of attorneys, trust documents and other estate documents, depending on the nature of your situation.      

Our services include:

  • Consultation with respect to owning U.S. property
  • Preparation of U.S. estate planning memorandum
  • Preparation of U.S. last will & testament
  • Preparation of U.S. power of attorney
  • Preparation of U.S. trusts, including revocable trusts, irrevocable life insurance trusts & cross border real estate trusts.   

Proper ownership structure and estate planning are crucial when Canadians own property in the U.S. Having the proper U.S. estate planning documents in place can save you and your family significant headaches and costs at the least opportune times.

Contact us by email at info@ingenuitycounsel.com or at call us at (519) 252-3888 to explore your estate planning options.

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