Here’s the situation:Purchase Price: $540,000Down Payment: 20%Mortgage Rate: 7.125% (30-year fixed)Monthly Expenses (Mortgage, HOA, Taxes, Insurance): $3,706Realistic Max Rent: $3,000As you can see, I’m currently short $706/month even with max rent.

Do you have a current need for that cash flow generated from the tax savings?

Often times you will pay much more in taxes than if you pulled the money out, paid the taxes and penalty and then started investing in real estate.For example, with the financing you mentioned, the IRA must pay taxes on the portion of the profit earned by financing. 

There are two reasons this is a bad idea.Investing with an SDIRA (assuming it is not a Roth) will often result in paying significantly more taxes. 

Are there any tax implications or considerations for Canadian investors investing in the U.S. through an LP?

Now I can see some builders having an issue with comps.. but other than that its crazy to take these funds as income and then pay tax and plow it right back in.. 

The US Government and the States have but one way to deal with this, taxes.

Yes, you will have to file the partnership tax return.

As U.S. citizens residing in Europe, we are required by the local tax code to hold the property in our personal name.

The cashflow should cove ALL of the expenses for the primary (mortgage, taxes, insurance, utilities, etc) AND put money in their pocket.