All Forum Posts by: Henry Der

After more research, seems like this is a reasonable scenario:

Myself and my corporation (both Canadian) will be shareholders in a US C-Corp. This US C-Corp will hold several US LLC's. the LLC's will hold 5 to 10 properties each. The LLC's are just to contain and limit access to only that group of properties in the event of attack/lawsuits - rather than attack the C-Corp directly.

With a C-Corp, there is minimal witholding tax per the Canada/US tax treaty.  5% against dividends to individuals, 15% to corporations.  Typically, the Canadian tax will be greater than this and you can get it back with a foreign tax credit filing - so you are NOT double taxed.

You can also charge active management fees from the Canadian corp against the C-Corp and withdraw funds that way.

 Considered using a limited partnership to flow through the earnings directly to the Canadian shareholders - very good idea, but there is a  witholding tax of around 39%, which could take up to a year to get back - too long for real estate business.

My last question is where to register the C-Corp, if you are buying Ohio property?  Some have said Wyoming, for no state tax reasons, but I understand this doesn't matter as you will have to pay taxes to Ohio regardless.  So, is there any real advantage of registering a C-Corp in another state other than where your real estate holdings will likely to be?

Hmm... the CPA (US/CAN qualified) I discussed with recommended this structure...  taxes are sooo confusing as there seems to be many opinions out there, even among the professionals.  The overall recommendations out there on the net seem to recommend Limited Partnerships for Canadians holding real estate in the US as this is a flow through structure, however, LP's are more expensive to set up and one CPA commented he did not prefer LP's as it is easier to get $ out of a C-Corp under the guise of management fees.

Curious - what structure do you use/recommend for your real estate holdings/rents/flips?  Maybe there is something I can glean from that.

Thanks!

Thanks Ned. Here's a bit more background and thoughts... 2 Canadian entities would own shares in the US C-Corp. Choose a 0% state tax like Nevada for the C-Corp - not sure if this is the best state? The purpose of the LLC would be to hold groups of properties to limit liabilities. Example, 5 LLC's holding 10 properties each, held by the C-Corp. Then corporate tax would be only the federal component of 21% max. Funds would be extracted by active consultatoin fees charged by the Canadian entitie(s), and taken out by dividends.

Considered a limited partnership for cleaner flow through pruposes, but was told that it is more difficult to get active consultation fees out of it and there is a withholding charge that could take up to a year to get back out to the Canadian entities.

Your feedback is appreciated.

Will be purchasing Ohio real estate for rentals and flips under LLC's. Planning to use a C-Corp to hold these LLC's. Can I use a C-Corp registered in a different state with better taxes, or must I use a C-Corp registered in Ohio? Other insights along this line would also be appreciated.

@Rodney Rowland Yarger - would like to do some home flips and buy/hold/rents.  Would like to hear how some of your Canadians have entered and succeeded in Ohio.  Thanks!

New to the US market.  I understand there is no nationwide search website.  Would like to know the best search sites to find properties - mainly residential type units like multi-family, single family, mobile homes.  

Thanks in advance! 

Thank you…! Can you recommend a website to view listings as per your recommendation? In Canada, we have a national MLS where you can search the whole country and pretty well every single listing is accessible through the one website (called monopoly!). However, I understand the US is more disjointed when it comes to property listing websites. Thanks in advance!

The allure is way below market rents (400 vs 650 so I'm told)  and management in place... but I know, things always are presented better than they actually are...hence the temptation of the "cheap" deals!  If lower rents than actual market is true, then you would think these "low quality tenants" would most likely stay and pay as everywhere else is asking for more...hmmm

Only reason for Lima is that there is an opportunity to purchase a large package of homes, hence my inquiry to that area.  Otherwise, am quite open to whatever region  makes sense for cap rates and flip returns.

Double taxed!!!  Need to discuss with an accountant that does this type of work, if you know any?

In terms of what I had in mind?  Kind of open to what makes sense.  Have not made entry into the US market yet.  Can do multi-family holds, single family flips, or whatever makes sense in terms of best cap rates or best return for flips.