The decision to purchase US real estate may not be as easy as it seems, and there are many myths surrounding how Canadians should do so. Although there can be many benefits for Canadian residents who are looking to purchase US real estate, an unanticipated tax bite can quickly turn a sweet deal sour. It’s important to evaluate how the potential tax consequences will affect you, and consider alternatives. Below are some questions to help you determine what your next step should be.
Are you a Canadian resident (and not a US citizen) who is considering the purchase of personal-use real estate (and not rental income property)?
Yes … continue to next question
No … If you’re a US citizen, the information in this section likely doesn’t apply to you
What’s the magnitude of your exposure to estate tax?
Calculate your exposure to estate tax with the following formula:
(Value of US property ÷ Value worldwide assets computed under US estate and gift tax principles) x Exemption (i.e. tax credit). This information will be determined at the time of death.
Significant … continue to next question
Insignificant … you may want to continue to the next question or skip to the Day Count section
Do you care?
Yes … continue to the Trusts section to explore your options
No … if you’re not currently concerned about US estate tax exposure, then visit the Day Count section of this website to find out how that may affect you