FAQ about Phoenix Investment & Our Investment Property Services in Phoenix Arizona

Why Work With Phoenix Investment?
What are withholding taxes and do I have to pay them when I purchase an investment or recreational property through Phoenix Investment?
Do I need a U.S. social security number of tax ID number?
Do I have to file a U.S. tax return?
Is there double taxation on the income or capital gains from my investment property?

Why Work With Phoenix Investment?

Most of the apparent bargain-priced properties available through the MLS are foreclosures or short sales, or lender-owned and are being sold AS-IS, WHERE-IS and you buy at your own risk! Yet even then the banks seek multiple offers that causes prices to be pushed up. Realtors can only sell the listed properties and do not have access to the incredible deals that we do. We take the hassle and headaches of purchasing and managing an investment property for you so you don't have to worry about any of the issues surrounding foreclosures, liens, unhappy home occupiers, renovations, etc.

If we do not currently have your ideal investment or recreational home or condo that you're looking for in Phoenix Arizona, WE CAN FIND IT! Just let us know what your investment property requirements are and we'll get it for you.

You will not be able to find the same real estate deals that we can. Our connections run deep in the Phoenix real estate development and banking communities, thanks to the large volumes of business we've done in Phoenix over the past decade.

What are withholding taxes and do I have to pay them when I purchase an investment or recreational property through Phoenix Investment?

Canadians who sell Arizona real estate have two kinds of withholding taxes they may incur upon selling an investment or any other type of property. For the best answers for your particular situation, we strongly encourage you to speak with your accountant or one well-versed in Canada/US tax laws. For more information, check out the Foreign Interest and Dividends guidelines on the Canada Revenue Agency web site.

One way for many Canadians to avoid the gross withholding tax that come along with owning investment property is to file a U.S. tax return and elect to pay tax on net rental income. The Canadian resident can then receive a refund for any taxes withheld, to the extent the withholding amount exceeds the tax payable.

If a Canadian owns U.S. rental property and incurs significant expenses (mortgage interest, maintenance, insurance, property management, property taxes, etc.) they may want to file a U.S. income tax return and take advantage of the net rental income election. The amount subject to tax at the marginal rate will likely be substantially lower than the amount subject to withholding tax.

If a Canadian sells real estate located in the U.S a withholding tax of 10% of the gross sales price is normally payable. The tax withheld can be offset against the U.S. income tax payable on any gain realized on the sale, and refunded if it exceeds the tax liability. The 10% withholding requirement on the gross sales price applies regardless of the sellers adjusted basis in the property.

At the end of the day, due to the tax treaty between Canada and the US, there will be little difference between making the money there or here for many Canadians.

Do I need a U.S. social security number of tax ID number?

There are 3 tax numbers that are going to come into play:

1. Canadian Social Insurance Number (SIN)

2. U.S. Social Security Number (SSN)

3. Individual Taxpayer Identification Number (ITIN)

You will never use your SIN for U.S. tax filing purposes. SSN's are only held by U.S. citizens or legal residents that qualify under specific circumstances. An ITIN is what you'll need as a Canadian to file U.S. taxes for the rental or sale of U.S. real estate. Our property manager can assist you in the process.

Do I have to file a U.S. tax return?

If you hold a Green Card or are considered a "resident alien" under the Substantial Presence text, you will have to file a tax return. There are a few IRS formulas that determine whether or not you are considered a "resident alien," and, therefore, required to file a U.S. tax return. The numbers and rules are rather convoluted, so you should as your tax advisor how they apply to your particular circumstances.

If you have income producing investment property in Arizona or anywhere else in the U.S., you're going to file a U.S. tax return to report your annual income from the U.S. property.

Is there double taxation on the income or capital gains from my investment property?

With proper tax planning and professional advice there should never be double taxation when you own an investment property. The Canada-U.S. Tax Treaty has many provisions built into it to protect citizens from being taxed twice by the U.S. Internal Revenue Service (IRS) and the Canada Revenue Agency (CRA).

There are a number of credits and deductions that can be claimed going both directions, and you will definitely need the services of a sharp, cross border tax planning professional to help you keep more of you hard earned funds. Remember, what you don't know can REALLY hurt you, so get professional help. If you don't have your own tax professionals already, please ask us for a referral. We have a team of exceptional partners experienced in helping Canadians plan their taxes for maximum effectiveness.