Q: I am a Canadian citizen and live in Canada. If I buy property in the United States is it going to be subject to state tax?
A: Yes, if you rent the U.S. real estate, you will be subject to U.S. income tax rental income. Even if you use the U.S. real estate solely as a holiday home, any real property in the U.S. by death shall be subject to taxes on U.S. goods.Q: How can I stay away from the withholding tax of 30%?
A: The laws of the United States would allow income to the owners of the U.S. assets rights that are not citizens or residents of the United States to choose to be treated as engaged in a U.S. trade or business. The election is the obligation to submit an annual U.S. income tax, but allows non-US investors to calculate their U.S. income the tax in net terms (reduction of rental income gross of deductible expenses, including depreciation).Q: If I do not lease or rent my property to others, will I have all U.S. tax obligations?
A: Yes, in case of your death (and if you own US property), you will be subject to U.S. property tax.Q: How does the U.S. property tax differ from the tax I pay to Canada after my death?
A: U.S. property tax is different in many aspects as compared to Canadian death tax. Three of the most important differences are, first, the rates at which property taxes the U.S. imposes: federal rates range from 18% to 45%, and the state in which the property is located may also impose a state estate tax. Second, taxes on U.S. properties are assessed on the combined market value of real estate fair. By contrast, consider the provision of Canadian death tax which only taxes the profit to be gained if the property is to be sold.Q: I can avoid the taxes that I would otherwise pay to the Canada Revenue Authority after my death, basically, to leave the property for my partner. Will my partner avoid taxes?
A: No, unless your partner is a U.S. citizen.Q: Is there a strategy that allows me to avoid taxes on U.S. property?
A: Yes, you can. But the point is that in order to succeed you must have a comprehensive plan. Start planning long before you are about to purchase US property.Q: Where can I get information on how to avoid US property taxes?
A: It is imperative that you consult a tax advisor with experience in U.S. tax matters, otherwise you may pay huge amounts in taxes.Finally, it needs saying that Canadians are eager to buy US property, especially in the south as retirement or vacation options. As you can see from FAQs, there isn’t many problems associated with the purchase of the US property by a Canadian citizen. At the same time, this requires thorough planning. A visit to a lawyer competent in US property legislation is a MUST for every Canadian dreaming of buying US real estate.