Resources For Canadians
As a result of our proximity to the Canadian border, many of our clients are Canadian citizens buying or selling property in the United States. A buyer or seller’s foreign status presents several unique concerns, especially in the area of tax reporting.
The United States Foreign Investment in Real Property Tax Act (FIRPTA) comes into play any time a Canadian sells property in the United States, and there are consequences to both seller and buyer for non-compliance. Under most circumstances, the IRS requires the buyer to withhold fifteen percent (15%) of the purchase price until the seller files a US income tax return showing the actual amount of tax owed.
Generally speaking, withholding is not necessary if the purchase price is less than $300,000 and the buyer will be using the property for his or her personal and residential use at least half the time the property is used for the first two years after closing. If these conditions can't be met, we recommend you discuss obtaining a Withholding Certificate with your accountant - especially if you believe you'll be taking a loss on the property. The sooner this process is started, the less likelihood your transaction will delayed due to FIRPTA concerns.
Please call our office directly for more information.