Ian Charlebois
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Buy · U.S. property
Owning a home in the U.S. puts you under two tax systems. The rules come into play at four moments: when you rent it out, when you sell, as your days in the U.S. add up, and at death. Here is what each country’s rules say, in plain terms, so you know what to ask our cross-border accounting partners before you buy.
Renting it out
Rent paid to a nonresident is taxed at 30% of the gross (or a lower treaty rate), with no deductions, unless you elect to treat it as effectively connected income. Then you file Form 1040-NR each year and are taxed on the net, at graduated rates. You’ll need an ITIN if you don’t have a Social Security number.
Canadian residents report all income from foreign property, whatever it cost. U.S. tax you pay on that income may be claimed as a foreign tax credit, so the same rent isn’t simply taxed twice.
A rental held with a reasonable expectation of profit is specified foreign property. If your foreign property costs more than $100,000 in total at any time in the year, you file Form T1135 with your return.
Selling
When a foreign person sells U.S. real estate, the buyer generally must withhold 15% of the amount realized, usually the price, and send it to the IRS. You then file a U.S. return to report the actual gain and claim credit for the withholding. In Canada, you report the gain too, and U.S. tax paid may be claimed as a foreign tax credit.
FIRPTA withholding is a percentage of the price, not the profit. Plan for it before you list.
Every year
Count all your U.S. days this year, a third of last year’s and a sixth of the year before. At 183, you may be a U.S. resident for tax, unless you were present fewer than 183 days this year and file Form 8840 by the deadline to claim a closer connection to Canada. Count yours here.
A vacation home you use primarily yourself isn’t reported on Form T1135. The CRA reads "primarily" as more than 50%. Rent it out for profit and it is.
Keep the purchase price, closing costs and improvements in both currencies. Both countries will want your cost when you sell.
Cross-border tax is its own specialty. Our accounting partners practise it on both sides of the border.
At death
These are the questions to take to our cross-border accounting partners and a lawyer before you choose how to hold title.
How you hold title is decided once, at the purchase. It matters again at the sale and at death.
U.S. real estate owned by a nonresident who isn’t a U.S. citizen is subject to U.S. estate tax. The executor must file Form 706-NA if the U.S. assets are worth more than $60,000 at death. Tax treaties, including Canada’s, can provide more favourable treatment.
At death, Canada treats your property as sold at fair market value just before death, unless it passes to a spouse or common-law partner or another exception applies. The gain goes on the final return.
Rules checked on October 16, 2026 against the IRS (FIRPTA withholding and its exceptions, rental income, the substantial presence test and Form 8840, estate tax for nonresidents, ITINs), the Canada Revenue Agency (Form T1135, the foreign tax credit, property at death), the Financial Consumer Agency of Canada, the Florida Department of Revenue (documentary stamp tax, homestead exemption), Ontario (OHIP outside Canada) and Global Affairs Canada.
This is general information, not legal or tax advice. Rules change, and how they apply depends on your situation, so confirm yours with a cross-border accountant, such as our partners on both sides of the border, and a lawyer before you act.
Questions
A U.S. law under which the buyer of U.S. real estate from a foreign seller generally must withhold 15% of the amount realized, usually the price, and send it to the IRS. The seller then files a U.S. return to report the sale and claim credit for what was withheld. See the IRS.
Several. One common one: no withholding if the price is $300,000 or less and the buyer, an individual, plans to live in the home at least half the days it’s used in each of the first two years. A withholding certificate from the IRS can also reduce it. See the IRS exceptions.
Rent paid to a nonresident is taxed at 30% of the gross (or a lower treaty rate) unless you elect to treat it as effectively connected income and file Form 1040-NR on the net. Once made, the election applies every year until revoked. See the IRS.
Not if it’s a vacation home you use primarily yourself. If it’s rented with a reasonable expectation of profit and your foreign property costs more than $100,000 in total, yes. See the CRA.
Possibly. U.S. real estate owned by a nonresident who isn’t a U.S. citizen is subject to U.S. estate tax, and the executor must file Form 706-NA if U.S. assets are worth more than $60,000 at death. Tax treaties, including Canada’s, can provide more favourable treatment. See the IRS.
No. This page is general information, checked against official sources on the date shown. For your situation, we introduce you to our financial partners on both sides of the border who specialize in cross-border accounting, and we plan the real estate and the financing around their advice.