Kotler van den Brink & Company   

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   U.S. & Cross Border Tax Consultants

 

 

 

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Contact Information.

A description of the services provided by KVDB.

Employment opportunities with Kotler van den Brink & Company

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The U.S.TAXFAX is a newsletter published by our firm covering various topics relating to U.S. and cross-border tax matters.

This PDF document discusses how non residents recover U.S. taxes withheld on gambling winnings.

Canada - U.S. exchange rates from 1990 onwards.

Information on how a U.S. non resident obtains a U.S. ID number.

This is a W-7 form and instructions in PDF format. It is a fillable form.

 

Many Canadians are investing in U.S. real estate directly, through Canadian corporations, and/or through partnerships.  The U.S. tax ramifications of these investments are often not considered when making the initial decision to invest.  If the U.S. property is rented, a few of the issues that must be addressed are as follows:    

bulletThe owners of the property must obtain U.S. ID numbers.
bulletIf a U.S. tax return is not filed, 30% of the gross rents must be remitted to the IRS. 
bulletThe U.S. return must be filed by a certain date or the IRS can disallow the deductions associated with the property
bulletState tax issues.  The U.S. State (e.g. California, Oregon, Hawaii, and Arizona) in which the property is located may require an income tax return in addition to the federal return. 
bulletIf investing through a partnership, the partnership may be required to withhold Federal and/or State taxes from any distributions made to the investor
bulletIf investing through a Canadian company, the complicated interest allocation rules may restrict the interest deductibility on the U.S. return.  The Canadian company may also be subject to the U.S. branch profits tax.

When the property is disposed of (whether or not this property was rented) the U.S. requires that a tax return be filed to report the capital gain associated with the sale.  Issues that arise and need to be addressed are as follows:

bulletIs there going to be U.S. tax withheld at source and if so, should a withholding certificate be filed to reduce this withholding?
bulletIs the U.S. Alternative Minimum Tax going to apply on the sale and can this tax be minimized?
bulletA foreign tax credit should be claimed on the Canadian return so that double taxation is avoided.

This topic is discussed in more detail in the following U.S.TAXFAXs:

 
bulletInvesting in U.S. real estate (rental income and sale)
bulletInvesting in U.S. real estate partnership
bulletSale of U.S. real estate
bulletID numbers for non residents of the U.S.