US CITIZEN buying and selling Canadian real estate and tax treatment
I'm a US citizen and looking to buy rental in canada. What are the tax laws for rentals? Gains while selling? Is there a double taxation treaty between us and canada?
I'm a US citizen and looking to buy rental in canada. What are the tax laws for rentals? Gains while selling? Is there a double taxation treaty between us and canada?
Rental income paid to a non resident of Canada has specific tax law. You have to find a Canadian resident to act as your agent via an NR4/NR6 which will enable you to pay 25% tax on net profits. Otherwise you have to pay 25% tax on gross rent. You can claim a credit on your US return for the foreign tax paid so you won't get double taxed. Buying and selling is more complex and you will want an accountant. There is a treaty to avoid double tax, but the rules are pretty different so the taxes owing under each system may be very different between the two countries and you wind up paying whichever is higher and getting a credit for whichever is lower.
Couldn't you also claim depreciation?
Canadian tax on real estate is totally different than US. Totally different set of deductions. You can't deduct depreciation in Canada as far as I know, instead you deduct money spent maintaining the property at the time you incur the expense. You also cannot deduct mortgage interest on a primary residence but you can on a rental.