US Real Estate Syndications while Candian Tax Resident

[Mike Helminger]

I will be moving to Canada later this year. I have three syndications that I'm invested in: 1 self storage and 2 MHP.

I am curious what tax implications there will be as I become a Canadian resident. I know the US and Canada have a lot of tax treaties. Is depreciation and bonus segregation handled in a similar fashion in Canada? 

I know one of the main tax-advantaged strategies is to take bonus depreciation to really accelerate things. Will this work in Canada?

[Jesse Fragale]

Mike, not legal or tax advice (of course) but in Canada we do have depreciation in the form of what is known as capital cost allowance.  Works very similarly to US depreciation. Instead of 27.5 years for resi and 39 years for commercial in the US...in Canada we have 'classes of property.  For instance, most Canadian residential rentals are "class 1" which means you can depreciate the buildings at 4% a year.  Which is very similar to 27.5. Example $1 million/27.5 = $36,363 or 3.63%.

As far as bonus depreciation and cost seg.  I am unaware of bonus depreciation in Canada.  My understanding is it was most recently an aspect of the Jobs Act in the US.  Thats out of my depth.  Cost-seg is a good question that I honestly do not know the answer to.  I know Canadians have used different classes of equipment in their rentals on different amortization schedules...but I am not sure if it is cost seg per se.

Hope that helps.