Apologies in advance ... this is lengthy and a little technical but it's a complex topic! Notwithstanding the recent weakening of the Canadian dollar, the decline in the value of US real estate may still present some attractive buying opportunities for Canadians.
The acquisition of US real estate by a Canadian resident not only has Canadian tax implications, but may also create US income, gift and estate tax consequences.
As most readers know, Canada’s system of taxation is one that will tax based upon residency. To the extent that you are a resident of Canada, you will generally pay Canadian income tax on your worldwide sources of income. To the extent that you are a non-resident of Canada, only certain types of income (such as Canadian source income or dispositions of taxable Canadian property) will be subject to Canadian income tax. Most of the countries in the world have a similar system of taxation as that in Canada where the primary tax basis is that of residency.
