Alexey Manasuev and Brandon Vucen featured in Advo​cateDai​ly​.com — When owning, investing in U.S. real property — address tax concerns early.

Author(s): Alex­ey Man­a­suev, Bran­don Vucen The fol­low­ing arti­cle by Alex­ey Man­a­suev and Bran­don Vucen, first appeared in Advo​cateDai​ly​.com,  April 5, 2018.

Thou­sands of Cana­di­ans own and invest in U.S. real prop­er­ty, but the issues one cou­ple recent­ly faced when sell­ing their vaca­tion home serve as a cau­tion­ary tale on the impor­tance of struc­tur­ing your invest­ment prop­er­ly and speak­ing to a qual­i­fied U.S. tax advi­sor, says Oakville-based U.S. tax attor­ney Alex­ey Man­a­suev. In the case, says Man­a­suev, prin­ci­pal of U.S. Tax IQ, hus­band and wife clients, both Cana­di­ans and nei­ther hold­ing U.S. cit­i­zen­ship, approached his firm with a ques­tion of whether they were required to file a U.S. tax return as they were sell­ing their vaca­tion home in Ari­zona. “They owned the U.S. real prop­er­ty, a vaca­tion home, through a cor­po­ra­tion. Ini­tial­ly, because they bought it 10 years ago, they used it for per­son­al pur­pos­es, but then in the last four years, they start­ed rent­ing it out. To man­age U.S. estate tax expo­sure, the Cana­di­an tax advi­sor 10 years ago advised them that they should make an invest­ment through a num­bered Ontario cor­po­ra­tion. And that’s how they held the vaca­tion house.” As a result, says Man­a­suev, the firm iden­ti­fied and addressed a num­ber of issues in this par­tic­u­lar case. “First of all, under U.S. tax rules, when you receive U.S. source income — in this case, rental income — you’re required to report it and file a U.S. tax return. No U.S. tax returns had been filed,” he says. Some­times, even when you are not gen­er­at­ing any income, you may still be required to file a U.S. tax return, as you may be deemed to be engaged in a U.S. trade or busi­ness…

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