Anyone own rental property in the US?

[Kjonus]

As per the title, I'm thinking about buying something and wondering if anyone has some experience with it. What are you paying to the IRS and Canada Revenue and anything else that I should know before I buy.

thanks
Kent

[dave335]

Re: Anyone own rental property in the US?

This is a complicated area so before you acquire, make sure you are aware of all the Canadian and US tax implications. In general, any rental income will be subject to withholding on a gross payment basis of 30% of every rental payment unless you file a US tax return. State withholding taxes may also apply. If you don't file a US tax return, the 30% withholding tax goes to the IRS even if your expenses may exceed the rental income that is derived.

If you are going to file a U.S. tax return (which you should if you’re renting out the property), you will need to get a Taxpayer Identification Number. You can make an election to file on a net basis which will allow you to deduct expenses from the rental income and pay tax on the net amount. You will then also pick up the net US rental income on your Canadian return but you will be able to get a foreign tax credit on the U.S. taxes that was paid provided that it does not exceed the Canadian tax that would have been otherwise payable.

There is also US estate tax concerns that need to be considered.

David