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Real Estate and U.S. Taxes: The Cost of Ownership

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Many Canadians own property in the U.S., and many Canadian retirees dream of owning property in a warmer climate than our own.

The U.S. has some complicated rules around taxation, and you could be subject to their taxation even as a non-resident.

There are 3 main considerations to keep in mind about U.S. real estate and taxes. Read what our colleagues at Wellington-Altus have to say about it in their recent blog.

For many Canadians who are not otherwise U.S. persons (“Canadian”), owning property in the U.S. may represent an investment opportunity,
a home away from home and an escape from the colder winter months. The complex nature of U.S. income tax rules related to property ownership and the financial consequences that come with them, however, should be an important consideration when making the decision to buy property south of the border.

Here are three ways that Canadian owners of U.S. property can be subject to the various U.S. tax regimes:

1. Collecting rental income

Canadian snowbirds who own a U.S. property and decide to rent it out for the time periods they are not using it, or any Canadian who owns a U.S. rental property, should be aware that where they have collected rental income for more than 15 days in any given calendar year they are subject to U.S. taxation on that income. U.S. tax is calculated one of two ways:

Option 1. Pay 30% withholding tax (U.S. Form 1042-S) on the gross rental income, without taking any expenses into account. By choosing this option, Canadians can avoid having to file a U.S. income
tax return.

Option 2. Make an election and file a U.S. non-resident tax return (U.S. Form 1040 NR) to report net rental income. After deducting expenses such as mortgage interest, property taxes, utilities and insurance, Canadian owners may end up paying less than 30% tax on their net rental income. Where the property is also used personally, deductions may be limited.

Helpful hints:

• Canadian residents, corporations, partnerships, or trusts choosing to rent their U.S. property for more than 15 days annually should keep careful track of expenses and evaluate the most advantageous method for reporting and paying U.S. tax on the rental income.

• When filing their Canadian tax returns, owners of U.S property must report the net rental income and pay Canadian tax on such. They can claim a foreign tax credit for U.S. tax paid to reduce or eliminate double taxation. They may also be required to complete form T1135 Foreign Income Verification Statement where their cumulative foreign assets cost more than CA$100,000.

• Depending on the location of the property, it may also be necessary to file city and state tax returns.

2. Selling U.S. real estate

When a Canadian sells their U.S. property, the proceeds are subject to withholding tax rules under the Foreign Investment in Real Property Tax Act (FIRPTA). This typically means that 10% or 15% of the gross sale price is withheld at the time of sale to cover U.S. tax on the net capital gain. Any amount withheld above the U.S. taxes calculated and payable will be refunded after their U.S. tax return is filed and processed.

There are two instances in which the FIRPTA withholding requirement can be reduced or eliminated:

Exception 1. The 15% withholding tax is waived if the value of the sale is less than US$300,000 and will be reduced to 10% for sales between US$300,000 and US$1 million, provided the buyer intends to use the property as a principal residence in each of the next two years, subject to certain rules.

Exception 2. If their U.S. tax liability is expected to be less than 15% of the selling price, sellers can apply for a Withholding Certificate from the IRS prior closing. In this case, 15% of the selling price can be held in escrow until the application is assessed and approved, which can be quicker than filing a U.S. tax return and waiting for a refund.

Helpful hints:

• It is generally necessary to file a U.S. non- resident tax return (U.S. Form 1040 NR) on the sale of a property, even if selling at a loss. It may also be necessary to file a separate city and state tax return, depending on the location of the property.

 Any capital gain on U.S. property is also taxable in Canada as part of the seller’s worldwide income, and they can claim a foreign tax credit on U.S. taxes paid.

• Foreign exchange gains (or losses) relating to the sale of the property must also be reported on the Canadian tax return. A foreign exchange gain or loss arises where the CAD-USD exchange rate at the time of purchase of the property differs from the CAD-USD exchange rate at the time of sale, assuming the property was purchased and sold in U.S. dollars. Often this is calculated and reflected when translating the USD transactions into CAD.

• Canadian residents can claim their principal residence exemption (PRE) in respect of gains on the sale of a U.S. vacation property when the property meets the PRE conditions. The PRE may not be available if the property was principally rented out. It may also not be advisable to claim the PRE on the U.S. property as any U.S. taxes payable cannot be claimed as a foreign tax credit.

3. U.S. Estate and Gift Taxes/Canadian Deemed Disposition Rules

Canadians who pass away owning U.S. situs assets may be subject to U.S. estate tax filings and liabilities. If the value of their collective U.S. situs property exceeds US$60,000, the estate will be subject to U.S. estate tax filings and may have a U.S. estate tax liability depending upon their worldwide wealth and the U.S. unified credit for the year.

What is U.S. situs property?

Assets that are situated in the U.S., including securities, debt and real property, such as houses, condominiums and deeded timeshare properties are subject to U.S. estate tax if the value of the person’s worldwide estate at time of death exceeds certain thresholds.

Similarly, gifting U.S. property to family members may trigger U.S. gift tax and U.S. tax consequences for both the giver and recipient.

Further, while Canada does not have estate taxes, Canadians are deemed to dispose of their assets at fair market value when they die. Unless the U.S. property is inherited by a spouse or spousal trust, an additional capital gain may need to be reported for Canadian tax purposes.

Helpful hints:

Verify whether your power of attorney and will are valid in the U.S. state where the property is located to avoid challenges in managing the property should you become incapacitated or die.

Conclusion: Think ahead, be prepared and get good advice

Canadians who need to file a U.S. tax return on the sale of a property, apply for a Withholding Certificate or request other exemptions will require an Individual Taxpayer Identification Number. This, along with other steps associated with U.S. rental income or sale of a U.S. property, may take weeks or months to complete and/or result in fines for missing tax filing deadlines.

As the U.S. tax code can be complex to navigate, and co-ordinating the numerous filing deadlines of U.S. and Canadian tax forms can be onerous, we highly recommend consulting a cross-border tax consultant for advice.

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. 

Amy Sweeney



Amy was born and raised in Squamish, is David’s oldest daughter and now the newest member of the Sweeney Bride team. Many may recognize her as she has worked periodically for the team for over 20 years. For the past five years, she has gained administrative experience and more running her own business as a Kinesiologist after completing a bachelor’s degree in Kinesiology at the University of British Columbia in 2016. Now, Amy is officially ready to join the finance industry. Currently residing in North Vancouver, Amy spends all her “free” time raising Dave’s two wonderful grandchildren.
Liam Hill


Associate Investment Advisor

Originally from Sydney, Australia, Liam moved to the Sea to Sky region in 2013, leaving the beaches behind to embrace the mountains. He hasn’t looked back since and enjoys exploring the wilderness by both land and sea.

Liam’s unique strength lies in his capacity to adapt and fine-tune strategies to match the ever-changing financial world. He’s a passionate advocate for adaptability and flexibility, believing these traits are crucial for securing financial well-being.

Liam holds the Canadian Securities Course qualification and is currently pursuing the Chartered Investment Manager (CIM) designation.

He shares his industry knowledge and business skills to empower individuals, families, and businesses on their path to financial success.

Liam is committed to educating our clients about the financial services industry and helping them make the most of available resources to achieve prosperity.


Administrative Assistant

Sharon worked for Sweeney Bride from 2014 to 2016 and recently rejoined the team as an Administrative Assistant in 2021. She has years of administrative experience in a variety of industries including working in legal and accounting firms. She enjoys being detailed, organized and efficient. When not hard at work, she enjoys exploring the great outdoors with her dogs, playing co-operative strategy board games and relaxing while sipping a nice Craft beer.

Carrie Freitag


Administrative Assistant

Carrie is the newest member of our team and is our Administrative Assistant. She has previous industry and administrative experience and her fascination with the finance industry is rapidly growing. Carrie moved to BC in 1994 from Ontario and never looked back. While not working she loves hanging out with her two kids, awesome cat Leo, and enjoys a competitive game of 21, and her gardens.

Katie Norton



Katie is a Business Administration graduate who joined the Sweeney Bride team in 2016. She takes care of on-boarding as well as managing account administration for our existing clients. She works hard to ensure the clients feel supported throughout the on-boarding process and is always available to answer questions.

A BC resident since 1997, Katie and her husband moved to Squamish to raise their two girls. They enjoy all of the outdoor activities and natural beauty that Squamish has to offer.

Liz Woodsworth


Office Manager

Liz joined the Sweeney Bride team in 2015 as office manager. She is the gatekeeper in the office and is the face that greets you as you come through the door. If she can’t help you, she will ensure you speak with someone who can. Liz is a long-time Squamish local; when not in the office she spends her days soaking up all that this town has to offer while chasing her two active boys. Liz brings her valuable organizational skills and enthusiastic attitude to the team. 

Janet Bride


CFP®, CIM® | Senior Wealth Advisor

Janet Bride is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 15 years’ experience in the Industry Janet holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Janet grew up in Ontario and moved out to beautiful British Columbia in 1995 with her husband, Paul, who is an adventure travel photographer. Her passion is to travel the world. Always interested in exploring different cultures and landscapes, she is grateful to have traveled to over 50 countries across 6 continents. She also enjoys continuous learning, spontaneous adventures with family and friends, and an active lifestyle in the Sea to Sky. Janet is proud to be a Big Brothers Big Sisters Alumni member since 2004.

She is highly motivated by helping people reach their financial dreams by creating comprehensive financial plans for individuals & families. While using a holistic approach to wealth management, she specializes in tax strategies and her goal is to encourage savings and help build our client’s wealth for a healthy and prosperous future.



CFP®, CIM® | Senior Wealth Advisor

Dave Sweeney is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 31 years’ experience in the Industry Dave holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Dave has lived in Squamish for most of his life. Married to his wife Donna, since 1987, they proudly have 3 lovely daughters, Amy, Danielle and Jamie. With his time in Squamish, it has allowed him an opportunity to become involved in many valuable groups.

Dave is a retired Captain of Squamish Fire Rescue after 35 years of service. Another passion was sports and he has been a coach for Squamish Youth Soccer Association where he dedicated 10 years to coaching girls Rep teams. Additionally, he is a former member and Treasurer of the Sea to Sky Community Services Board. Dave is a frequent contributor to Mountain FM’s Mountain Monitor, providing general advice and financial commentary.

Dave continues his volunteer work as Treasurer for both the Squamish Hospital Foundation and the Squamish Downtown Business Improvement Association. He is also a sitting Board member of the Squamish Community Foundation.

Professionally, Dave started his Financial Planning practice in 1994. After living through both his parents’ demise and witnessing what a lack of understanding they had, he realized what sound planning techniques could do to ensure that an untimely death did not destroy one’s lifetime work. For over 20 years, he has made it his passion to assist others in not facing the same plight.