The Blog


By David A. Altro
Note: This article originally appeared in Advisor.CA Magazine, in the “Advisor to Client”  Section.

For Canadians with U.S. property, a limited liability company (LLC) can cause major headaches due to the U.S.’s foreign reporting requirements. Though Canadians can personally avoid double taxation thanks to the Canada-U.S. Tax Treaty, CRA does not recognize a LLC as a flow-through entity (an entity in which income generated is attributable to its owner). This results in a mismatch in foreign tax credits.

Instead, CRA sees the LLC as a corporation — a separate taxpayer, which means double taxation that can be as high as 80% between both countries. So owning U.S. property in a LLC is usually not the right strategy for Canadians.

Further, if a Canadian corporation, instead of an individual, owns the LLC, additional problems arise at tax time. Under U.S. tax law, the LLC can be designated a disregarded entity. This means the Canadian corporation is a non-U.S. corporation, and it is subject to branch profit tax. Typically this is set at 30%, but the Canada-U.S. Tax Treaty reduces that rate to 5%. On top of this tax, the Canadian corporation will have to pay dividend tax on any amount it distributes to Canadian shareholders. So even when using a Canadian corporation, the LLC is still not the best way for you to invest in U.S. property.

Some Good News

Instead of owning property in a LLC, you can set up a U.S. Limited Partnership (USLP) and take title directly.   A USLP is a flow-through structure recognized on both sides of the border, so it lets you benefit from foreign tax credits and avoid double taxation. A USLP is composed of:

–  General Partner, which can be a LLC since it will receive only 0.5% of the income generated in the USLP
but will absorb 100% of any potential liability; and
One or More Limited Partners, who would receive 99.5% of the income but provide liability protection.

Most states and provinces allow limited partners to be directors of the corporate general partner without losing liability protection. Further, the only assets exposed to creditor claims are the ones owned by the USLP, leaving your personal assets out of reach. So the limited partners of the USLP benefit from creditor protection while receiving 99.5% of the income, and being taxed at lower rates.

Another advantage of the USLP: when partnership documents are drafted properly, you can avoid costly and time-consuming incapacity and probate procedures. As an intangible asset, partnership interests should pass with the partner’s domestic estate in Canada, irrespective of where the partnership owns assets.

And if you own assets in the U.S. and have worldwide estate values over $5.43 million, U.S. estate tax exposure should also be considered.

This tax is based on the fair market value of all U.S. assets owned at the time of death. It can climb up to 40%, depending on the value of the U.S. asset and the value of the worldwide estate. Note this is not a capital gains tax — it’s a value tax.

A well-thought-out structure can help avoid several problems. So consult with a cross-border expert to help set up a structure tailored to your goals.

This article appeared Feb 26, 2015 in the Orlando Sentinal, linked here .
By  Caitlin Dineen
Orlando Sentinel
contact the reporter

Orlando visitors will pay about 5 percent more this year to stay in the City Beautiful, according to 2015 hotel industry projections.

STR, a company that tracks supply and demand for the hotel industry domestically and internationally, released 2015 projections Thursday during a Central Florida Hotel and Lodging Association event.

This year’s expected increase of 5.7 percent is similar to the 5.9 percent increase in hotel costs seen in 2014, said Chris Crenshaw, STR’s vice president for strategic development.

Orlando’s occupancy rate also is forecast to increase this year, by 2.4 percent. That’s despite a 1 percent rise in rooms available for booking.

RevPAR, a metric that determines the revenue made per available room, gives Central Florida hotels a way to compare themselves with other properties, even if they do not have the same number of rooms.

Orlando hoteliers can expect an 8.3 percent increase in revenue per room during 2015, following a 10.7 percent increase in 2014, Crenshaw said.
“The difference was last year we had a much larger growth in occupancy,” he said.

Even though Orlando’s 2015 projected increase in room revenue is less than last year, it’s still above the national average of a 6.4 percent increase, said Crenshaw.

Orlando ranks as the nation’s No. 8 market for RevPAR growth, sandwiched between San Francisco and Dallas, said Crenshaw.

cdineen@orlandosentinel.com or 407-420-5414

 

This quick white board commercial pretty much sums up what we do.  All the work and send you $$$.

I hope you like it.

We’re finally adding an official website to our blog & FB presence. Inter Webs, here we come. Which is kind of ironic, since most of our actual business is done online or was designed to be. We just built the tools and processes first. Now that we’ve seen some results, we’re beginning to let the word get out. In any event, here’s one of the pics we’re gonna use for the site. The plan is actually to have video of this fountain. Subtle but fun. But in the end it’s the service that matters – not the website. We’re just thankful to all the property owners and everyone else who has gotten us to this point. Having the ability to run your vacation property like an exclusive hotel really is proving to be a game-changer.