Canadians purchase US property for a variety of reasons. Many Canadians regularly vacation in the US sunbelt or enjoy wintering in a warmer climate each year. Others may want to retire south of the Canadian border and then plan to pass their property on to their children and grandchildren. Still others choose to invest in US real property to generate rental income.
Regardless of the motivation for purchasing US real estate, without proper planning, Canadian owners of US real estate are subject to laws on both sides of the border and are therefore exposed to cross border legal issues, particularly if they own US property in their personal names while incapacitated or upon death. Legal headaches such as probate and guardianship proceedings can often be alleviated by holding title to US property in a customized ownership structure tailored to one’s individual needs, such as a cross border trust. Trusts can also provide protection for future heirs of one’s US property.
Canadians who own US rental property have additional issues to consider, such as liability; tenants have the ability to sue for extensive damages in the litigious US. Creditor protection therefore becomes a concern for those Canadians who own US property for investment purposes. Strategies for paying income tax at the most advantageous rate while preserving foreign tax credits are also important.
Issues for Canadians who own US real estate can arise at any time. Tax Partners creates customized estate plans that anticipate issues such as probate and incapacity in order to provide peace of mind to clients who own US real estate. Our tax and estate plans also help protect assets for heirs as well as provide additional liability protection for rental properties.