estate tax canada
US & CDN tax question –Canadian living in US and investing in Canada -Good idea or not?
As a Canadian living and working in the US on an H1B visa, is buying a rental property in Canada a prudent idea? I know that I can buy property, but should I? What are the CDN and US tax implications of doing so? I have heard that 1-Revenue Canada may consider me a resident for tax purposes, 2-the IRS may not allow me to right the interest, purchase fees, or CRC penalties off against US income, and 3-I would be paying capital gains tax on the property when I move back to Canada.
If what I have heard is true, buying Canadian real-estate would be a bad idea for the following reasons: The effect of #1 would be to increase my tax rate to the effective rate as if I were in Canada (approx 20% more tax on total income); the effect of #2 would be to eliminate all US income tax incentives for real-estate investment; the effect of #3 would be to wipe out any gains from property appreciation.
Unless you are in the western part of Canada forget rental real estate. If you own and rent a house in Canada, you will have to pay taxes to Canada, and declare any income to US government. Living and working or investing in two countries, will cost you with taxes vs investing in the state you live.
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