Foreign Investment in Real Property Tax Act (FIRPTA)

A Canadian citizen’s sale of real property located in the US can be subject to backup withholding on the gross amount received. Where the total amount realized by a Canadian is less than $300,000 for sale of real property used as a residence by the buyer, the buyer is not required to withhold and submit taxes to the IRS. Where the real property was not used as a residence, or if the gross amount received is greater than $300,000, then the buyer is required to withhold 15% of the gross amount the Canadian received and submit it to the IRS.  A tax certificate can be applied for, but slow response (approximately 90 days after the application date) from the IRS significantly reduce the viability of this option. A refund of the 15% withholding can be applied for by subsequently filing a US income tax return.

US Income, Gift, and Estate Tax Planning
Income Tax – Gain on Sale of Real Property
Gift Tax
Estate Tax
Income Tax – Rental income in the US

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