LLC for real estate investing, Canadian citizen

canadianguy · Post by **canadianguy** » Fri Dec 23, 2011 4:21 pm

Hi everyone,

This is a great forum with great questions and answers! I'm learning lots.

I was wondering if anyone here has had experience with a Canadian citizen forming a company in the US for real estate investing.

I've done a lot of research on LLCs and it seems that an LLC electing to be taxed as an S-corp is most advantageous for this line of business. However, as a Canadian citizen, I would be ineligible to do this (no foreign entities for subchapter S). Looks like my options would be to form: LLC/partnership, LLC/C-corp, or C-Corp.

Anyone with insights as to which would be best? Any other alternatives?

Thanks to everyone in advance!

canadianguy · Post by **canadianguy** » Fri Dec 23, 2011 4:34 pm

Sorry if my use of terms are incorrect. It's all new to me, but I'm learning... :oops:

JGCA · Post by **JGCA** » Fri Dec 23, 2011 7:03 pm

There has been confusion over LLC since under the new Article IV of the treaty as to whether or not the CRA will view this as a US tax resident. THey are saying that LLC will be denied teh treaty benefits yet they are allowed to LLP and S-corps as you said, this begs the question why the difference?

The recent supreme court of Canada case of TD securities in Canada has opened a window on teh different treatment of LLC vs S-corp or LLP. CRA has not yet appealled the case which was favorable in allowing treaty claims to LLC as they do to other Hybrid entities. I think the LLC will be recognized in certain instances but only if they are owned by US residents not necessarily Canadians. You should go with an LLP to be sure or even a C corp.