What are the tax consequences for Canadians buying for renting purposes in the USA?

Asked by Lynn, Outside U.S. Sat Apr 16, 2011

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Dan Mullarkey’s answer
Dan Mullarkey, Agent, Scottsdale, AZ
Sat Apr 16, 2011
Hi Lynn,

Great question! I have many Canadian investor clients that have purchased rental homes here in the Valley. I have them first apply for a US Tax ID number, then set up a US Bank account, which makes depositing the rent much easier. I take it a step further and have the tenants wire the funds directly into their account, which is much easier and timely than sending the rents up to Canada. One thing that wasn't mentioned here is that you will also want to check with the local municipality to see what the city tax rate is, that way you can collect it on top of the rent, making tax time that much easier and keeping more money in your pocket.

As I mentioned, I am a full service agent that specializes in Canadian investors. I can help you with every facet of renting here in the States, from finding the right property in a high demand rental area to securing a tenant and coordinating any necessary repairs. Please feel free to contact me anytime with questions, I'd be delighted to help!

I also have a bank owned foreclosure search that makes it easy to search ALL areas of the Valley:



Dan Mullarkey
Associate Broker, ABR, CDPE
West USA Realty
480.948.5554 office
480.296.5959 cell
480.452.0745 fax
Skype: dmullarkey
Web Reference:  http://www.PhxRepoHomes.com
1 vote
Alice Seger, Agent, Scottsdale, AZ
Sat Apr 16, 2011
As the others it is always best to contact a tax professional. I also recommend a Bryant Andrus from Keats Connelly (602-955-5007). But basic answer is (and please contact them to explain in detail as it relates to your situtation specifically) one is to have the tenant hold 30% out of rent and pay IRS direct or get a US tax number and file a US income tax return every year. The last way seems to take care of it better as you never know how reliable a tenant would be. So that's the general gist of it but you'd need professional advice for your specifc needs as I have several Canadian clients and each was a bit different. So hope this gets you started.
0 votes
, ,
Sat Apr 16, 2011
Dear Lynn:

It is best to contact a local C.P.A. for tax consequences.

Here is the company that I recommend.

Steven Adolson
Dobbins Financial
(602) 279-5464

Terry S. Smith

Scottsdale Luxury Specialist

45 Year AZ Resident

DPR Realty LLC

8341 E. Gelding Drive

Scottsdale, AZ 85260

Contact me Direct (602) 763-1858

Office (480) 994-0800


1 vote
D. Elizabeth…, Agent, Tempe, AZ
Sun Sep 23, 2012
Contact a reputable CPA for a complete answer. Some cities charge a rental tax of usually 1.5% to 2% a month. FIRTA applies to all foreign investors when they sell their residential properties.
Elizabeth Vincent 602 85-2476
0 votes
Spirit Messi…, Agent, Tucson, AZ
Sun Apr 17, 2011
Great question. Please consider speaking the a CPA, about tax ramifications of owning Investment Properties, declared income (rent), and etc.

Best of luck.
0 votes
Dan Tabit, Agent, Issaquah, WA
Sat Apr 16, 2011
US taxes or Canadian? One consequence is called FIRPTA. When you everntually sell the home a portion of the gain may be withheld to cover taxes. I've attached a link to an IRS page on the subject.
0 votes
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