David A. Altro recently wrote an article which appeared on Advisor.ca and in the Advisor’s Edge magazine. In the article, David explains how Canadians can own U.S. rental property and the various considerations which are important to consider with a cross border investment. Click here to view the article online or scroll down to read and excerpt of the piece.
How to own U.S. rental property
DAVID A. ALTRO
ADVISOR.CA & Advisor’s Edge
January 2015
Canadians are purchasing U.S. property while prices remain affordable. Chances are they need advice on the best ownership structure, which should address issues such as probate, incapacity and U.S. estate tax. Those who own rental properties have two additional concerns: creditor protection and maximizing profits through tax planning. Partnerships are a good way to protect owners of U.S. rental properties. Since partnerships must have a profit motive, they’re not the right choice for personal-use property.
The most common partnership structures for owning U.S. real estate are:
- Limited Partnerships (LPs);
- Limited Liability Partnerships (LLPs); and
- Limited Liability Limited Partnership (LLLPs).
Limited Partnerships
LPs have two types of partners:
- General Partners: Unlimited liability for partnership debts
- Limited Partners: Liable only for partnership debts up to the amount of their capital investment in the partnership
If an LP’s used to hold U.S. real estate, it’s best to create a corporation as the general partner. Clients can act as limited partners. The general partner typically invests a small amount in the partnership, while the limited partners invest the remaining amount. Here are some of the benefits of holding U.S. rental property in an LP.
Click here to read the full article on Advisor.ca.
