Picking up from last week’s blog where I took a look at some things you should consider before traveling to the US this winter, let’s take a brief look at issues relating to US property ownership and US citizens living in Canada.
Owning US Real Property
Given the price of US real estate and our strong dollar, many Canadians are buying or thinking about buying a US vacation property. If you own or are planning to purchase US real property, you should know whether your Canadian will and POA’s are considered valid in the jurisdiction where your property is (or will be) located. If anything should happen to you, will your executor or attorney for property be able to deal with your US real property?
It is also important to know that if you live in Canada but own property in the US, you may be exposed to double taxation upon your death which arises from Canada’s deemed disposition rules as well as the non-resident estate tax imposed by the US. Although there may be some relief under the US/Canada Tax Treaty, you’ll need professional advice to understand how you may be impacted and what steps you should take to minimize tax.
US Citizens Living in Canada
If you have dual US-Canada citizenship or if you are a US citizen resident in Canada, there are important issues to consider. Unlike the Canadian tax system which is primarily based on residency, the US tax system is based on residency as well as on citizenship. Did you know that:
- All US citizens regardless of where they live, US residents, and green card holders are required by law to file a US tax return. If you have a parent who was born in the US, you may be considered a US citizen even though you have never worked, lived, or attended school. As a result, you may have US tax filing obligations.
- Failure to submit the required filings on time could result in significant consequences such as passport renewal being denied or being refused entry into the US until tax filing/records are up-to-date.
If you are travelling to the US this winter, currently own or are thinking of purchasing property in the US, or have US citizenship, be aware of the unique tax, financial, and estate planning issues that you need to consider. I encourage you to seek the advice of a knowledgeable expert in both Canadian and US tax and estate planning matters that can assist you and provide you with advice as to your obligations and options.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.