Hi,
I'm a Canadian citizen living in the US as a PR and I've been considering buying property in Ontario for my parents. I'm curious if there's any tax gotchas I should be aware of in terms of renting to family and whether this would establish residential ties in Canada or not?
Thanks
US Resident buying Canadian Property to rent to family
Moderator: Mark T Serbinski CA CPA
-
- Posts: 2
- Joined: Thu May 12, 2022 12:39 am
Re: US Resident buying Canadian Property to rent to family
No. Once you have established foreign residency, such a property -- even one that you keep solely for yourself -- would not make you resident, since by treaty, you meet all the requirements of US vs. Cdn residency.
You would need to be wary of US gift tax, so make sure you are not giving them the property.
You would need to be wary of US gift tax, so make sure you are not giving them the property.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
-
- Posts: 2
- Joined: Thu May 12, 2022 12:39 am
Re: US Resident buying Canadian Property to rent to family
nelsona wrote:
> No. Once you have established foreign residency, such a property -- even
> one that you keep solely for yourself -- would not make you resident, since
> by treaty, you meet all the requirements of US vs. Cdn residency.
>
> You would need to be wary of US gift tax, so make sure you are not giving
> them the property.
Ah interesting, that makes sense re: the US gift tax! Good to know that this wouldn't necessarily make me a resident in Canada for tax purposes.
I think at a high level then, I'd be on the hook for property tax in Canada, any capital gains if I were to sell the property and would have to report the property whenever filing my US taxes?
I'm also assuming that because my parents would not be considered an arm's length transaction that I couldn't redeem any tax credits with respect to renting out the property to them?
> No. Once you have established foreign residency, such a property -- even
> one that you keep solely for yourself -- would not make you resident, since
> by treaty, you meet all the requirements of US vs. Cdn residency.
>
> You would need to be wary of US gift tax, so make sure you are not giving
> them the property.
Ah interesting, that makes sense re: the US gift tax! Good to know that this wouldn't necessarily make me a resident in Canada for tax purposes.
I think at a high level then, I'd be on the hook for property tax in Canada, any capital gains if I were to sell the property and would have to report the property whenever filing my US taxes?
I'm also assuming that because my parents would not be considered an arm's length transaction that I couldn't redeem any tax credits with respect to renting out the property to them?
Re: US Resident buying Canadian Property to rent to family
I'm pretty sure that these credits are only available to residents. You won't be filing provincial tax returns for this income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing