Luckily Canada and the US are very good friends with a long-standing tax treaty that has for the most part synced well with each other. Hundreds of thousands of residents from both sides of the border live and work on the other side, so there is a robust infrastructure of professionals and information out there to make most tax issues easy to anticipate.
If you plan up front and ask the right questions, you will only be taxed once in whichever country has the highest taxes due. Which in just about all cases means you are going to be paying Canadian tax rates on the income you make in the US. Sorry my northern neighbors, us here down south are a tax haven comparatively.
The secret, super simple way to look at minimizing your taxes, is to not worry too much about minimizing your US tax. Focus on what you will be able to deduct with the CRA.
Because of the large tax rate difference between the two countries and the dollar for dollar foreign tax credit you can take on your CRA taxes (for any dollar you pay in US taxes, you can get a credit of a dollar for any taxes owed in Canada on the same income); in nearly all cases you be owing more in Canadian tax than US tax. So any tax you pay here in the US doesn’t really matter so long as it is below what you will owe anyway in Canadian taxes. This is of course if you don’t attempt to do anything that would disqualify the taxes you pay here in the US from being credited to your taxes in Canada (“Common US Real Estate Advice that Canadians Should NOT Listen Too”)
It is very possible to just set yourself up right on day one and just set it, forget it and not have to worry about being taxed twice on the same profits. However, it’s always a good idea to check in every year at tax time with your cross-border specialists to make sure you are still set up for the most advantage of any changes in the tax laws.
For more, check out these additional articles:
“Top 5 Things Canadians Should Know Owning a Florida Rental Home” Coming Soon
“The Canadian Landlords Guide to the IRS” Coming Soon
“Top US Tax Mistakes Canadian Landlords Make” Coming Soon