The Cross-Border Tax Implications of Canadians Holding U.S. Real Property

The Cross-Border Tax Implications of Canadians Holding U.S. Real Property

Tax Law
By Anthony Diosdi Canadians actively invest in U.S. real estate by speculating on land and developing homes, condominiums, shopping centers, and commercial buildings. The article attempts to summarize the Canadian and U.S. tax consequences surrounding a Canadian’s acquisition of different U.S. real property interests. The most common way Candians hold U.S. real property is by direct ownership. Direct ownership by an individual Canadian resident of U.S. real estate is generally not recommended because the individual will be exposed to the commercial risks associated with the property. Personal ownership may also give rise to the U.S. estate tax and gift tax. Personal ownership of U.S. real property may also trigger cross-border tax filing requirements. If a Canadian owns real property that is income producing, he or she will likely be required…
Read More
The Potential Adverse Consequences Associated with the Transfer of Property to Foreign Entities by U.S. Persons

The Potential Adverse Consequences Associated with the Transfer of Property to Foreign Entities by U.S. Persons

Tax Law
By Anthony Diosdi Over the past couple of decades, there have been substantial changes to the U.S. tax law which can adversely affect any U.S. citizen, U.S. income tax resident alien, or domestic corporation, partnership, estate, or trust (hereinafter “U.S. Person”) that transfers assets to a foreign entity such as a foreign corporation, a foreign partnership, or a foreign trust. This article will briefly describe the U.S. tax consequences that could result from such transfers and the forms that must be filed with the Internal Revenue Service (“IRS”) as a result of such transfers. This article will also discuss the potential reporting consequences of such transfers. General Rules of TaxationIn general, contributions to a corporation, transfers to “controlled” corporations, certain reorganizations, and contributions to partnerships are tax-free events for federal…
Read More