Buying Real Estate with a Canadian Seller

[Matt Scholten]

Hello all, 

I am looking for some advice. I am currently under contract to purchase a duplex and the seller is a Canadian citizen. Does anyone have experience doing deals with a seller that is not a US citizen? I am working with Chicago Title for the title work on the property and they seem to be dragging their feet and not really sure how to do this. Due to the seller living several hours away in Canada closing in the same location is not really feasible. The title company said we the seller would have to close a Chicago title branch in the US or at a US consulate in Canada. Additionally there are also tax complications from my research it looks like the seller will have to have 15% of the sale price withheld on ensure capital gains are covered if the seller fails to file a US tax return. If anyone has experience in this that would be helpful also. Thanks!

[Chad U.]

@Matt Scholten

I am Canadian and buy/sell all the time cross border and quite often am in Canada for closings.  First of all, I'd suggest you get a Title Co who's done transactions with foreign sellers, especially if they are telling you to have the seller close at their branch or at a US consulate is completely false.  They simply need to do a "Fedex" closing whereby all the closing docs are emailed to the seller wherever they might be, they print them off, sign and have them notarized by an attorney.  Everything needs to be signed in blue ink (deed in particular), and then couriered overnight back the Title Co.  

As for the 15% withholding, if it is in their personal name (and not in a US entity), typically is up to the Buyer and their Title Co to handle this.  However, if they have  a US Tax ID (ITIN) the, seller can apply to have a withholding waiver certificate done by a US accountant who files the applicable info with the IRS.  Also, if the purchase price of the property is less than $300K then this withholding tax is generally not required, depending on the Title Co as it's a bit of grey area.