Canadian Investors

[Frank Geneski]

I wanted to see how many Canucks we have on here, obviously investing in RE in Canada is much different than how its done in the U.S.

It would be nice to talk about formula's, leads, ideas, and anything else to do with Canadian RE. Anyone else in Toronto?

[Mike Jakobczak]

Tim C. Financing is still difficult. Personally all my financing is from the private sector. This allows me to continue to purchase without any road blocks or jumping through hoops with banks.

Now if you do want to go conventionally, Canadians can get financing through Canadian banks who have US Affiliates (Example:BMO bank and Harris Bank) There are restrictions and guidelines to obtaining financing this way, but if you do manage you can get a great rate. Also down payments can range from 35-50% depending on the situation.

90% of Canadians either use Cash or leverage off Canadian properties/Line of Credits. With low interest rates it makes it appealing but remember that you will be losing a few points everytime you have to exchange dollars to pay down Canadian Debt.

I suggest not to hold in your personal name, it's a invitation to disaster with liability. I have in the pass, but strongly suggest some kind of structure. Buying in an LLC can be done if you elect the LLC just as a holding company and not an actual entity which pulls income. Usually set up with a C-corp or other entity is best. The reason for this is Canada doesn't recognize LLC and it triggers double taxation.

I normally use the structure above or some form of Partnership. Partnerships are great but general partners are subject to liability, so proper protection is still needed.

At the end of the day you should definitely sit down with a cross-border specialist. Everyone's situation and net-worth is different. I am not a accountant and any info given is just for education purposes and should not be used as legal advice**

As for withholding, there are restrictions and you may be subject to withholding. You can be exempt if the value is under 300,000 and buyer is owner occupied. But if not you will have to file a 8288-B form. If no form is filed the IRS will kindly hold onto your money until Taxes are filed. They are just that nice.