I am not an Accountant and am not giving any tax advice. But for those of you who are seeking for a general idea of what to expect in terms of taxation when investing in the States, this is what I learned today from my Meetup seminar:When investing in the States, it is best to set up a Corporation of some sort.
If you want to be a Trader - meaning your purpose down South is to flip, then you should get a "C-Corporation" - which gives a lot of flexibility to you. There is no withholding tax on the sale of your property. You can pay yourself dividends or shares. The income is taxable, but I don't believe it gets withheld. For more information, go visit an Accountant who specializes in this...
However, if you want to invest for the LONG TERM, then you want to go with a Limited Partnership (if you plan to do joint-ventures with others). Again, this has many tax advantages.
If you're a lone wolf, investing in the States, BE AWARE that you may face withholding taxes on the SELL (10% of GROSS) of your property, and on the RENT (30%) you collect as an investor. But, if you apply for a Tax ID number, then these withholding taxes are eliminated.
As a Canadian, your Accountant must help you file your taxes here and in the US. You don't get taxed twice, but from the sounds of it, there would be a lot of paperwork to fill...
Our guest speaker recommended MacKay LLP as a great accounting firm for dealing with US Tax issues. If you happen to know other good ones (in Vancouver, BC), please send me an email / or post your recommendation on the "Comments" section. I know we'd all appreciate it!!!
As I research further, I will update this section with more accounting related info!
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