Finally the answer to a much sought after question- What is the best way to structure your business as a Canadian when buying property in the USA?
Of all the things I experienced when starting out with investing in US property nothing caused me more stress then the subject of setting up my business structure in the states. I knew it was very important to structure my business so as to limit my liability, minimize taxes and maximize my returns but the way in which to proceed evaded me. All this talk of LLC’s, LLP’s S corps, C corps and ABC 123’s was enough to make a patient man go mad.
I talked to countless lawyers and accountants and I also listened to many “expert” real estate investors at seminars who usually have more experience selling mentorship packages then they do investing in actual real estate investing.
Finally, after a lot of dollars spent and much time invested I met a competent accountant certified on both sides of the border and a real estate lawyer who knew the ins and outs of American business structures. Together, they developed a structure that complemented what I was doing in the states PERFECTLY. Now that sounds like great news and for me it is, but unfortunately it’s not so great for you! I wish I could tell you THE structure to use when venturing out to invest in US real estate. The one that’s most cost effective limits liability and minimizes taxes the most. Unfortunately I can’t do this because NO SUCH STRUCTURE EXISTS!
Now, I know that’s not the information you were looking for but I have to be honest with you and any good accountant worth his salt will tell you the same. There is no one size fits all structure for Canadians to use when investing the US. The way you need to structure your business will be different depending on your goals and your plans. Will you be flipping property and regularly repatriating funds (bring money across the border)? Will you be holding onto properties with the goal of generating cash flow?
Your investment goals and strategies will dictate how you should structure your business. The best advice I can give you? Find a good accountant who is familiar with how things work on both sides of the border and who has experience working with real estate investors! Yes, accountants can be expensive (mine is upwards of $350/hour) but the truth is that they will put more money back in your pocket by giving good advice then their hourly rate will ever cost you. Trust me!
CFO Tax Lien Training Inc.