Canadian Snowbirds and US real estate investors

Canadian who own US real estate need specialized advice on the tax and estate consequences of their investments.  Whether you are a snowbird who spends winter months in Palm Springs, or purchase rental real estate for investment purposes in the US, a host of issues should be addressed to avoid any unexpected surprises.

Canadians earning income from US real estate, or who spend too much time in the US may have to file US tax returns each year.   It is important to speak with a qualified cross border advisor to ensure that no opportunities or obligations are overlooked.

Many are not aware of the potential US estate tax exposure to a Canadian resident who dies owning US assets.  The federal estate tax applies to the fair market value of the property on the date of death (regardless of loss or gain in that value) at rates up to 40%.  Further, in order to make use of the Canada-US tax treaty benefits, proper returns must be filed within 9 months of death.

How you take title to US real estate assets has significant implications for their tax and estate treatment.   We can explain all the options available and help to determine the most advantageous strategy based on your circumstances.  Once the optimal path is chosen, we can usually implement the structure in house, saving you the cost of bringing in additional professionals.

Our experience assisting clients with US real estate transactions also provides much needed peace of mind to those investing significant sums on real estate in a foreign country.  Whether you are buying or selling US real estate, you will be faced with significant volumes of paperwork to sign.  We can provide representation and guidance in these transactions to ensure a smooth and tax efficient process.

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Jonah Spiegelman is a cross border tax and estate planning attorney.