– New Trust Rules Impact US Citizens in Canada


David A. Altro and Heela Donsky recently wrote an article which appeared on and in the Advisor’s Edge magazine. In the article, David and Heela explain the impact of new trust rules for US citizens living in Canada. Read the rest of this entry » – How to own U.S. rental property

David A. Altro features: Advisor

David A. Altro recently wrote an article which appeared on and in the Advisor’s Edge magazine. In the article, David explains how Canadians can own U.S. rental property and the various considerations which are important to consider with a cross border investment. Click here to view the article online or scroll down to read and excerpt of the piece.

How to own U.S. rental property

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David A. Altro’s Book Available as an eBook

The second edition of the book Owning U.S. Property – the Canadian Way by David A. Altro has been available for just over a year and has experienced great success and received praise by readers.

In order to make the book more available, we have very recently released it as an eBook for the Kindle. The eBook can be purchased online from Amazon.

If you would still like to have a hard-copy of David’s book, you can continue to use our website to place an order online.

Gift Tax Developments

While it is possible to donate property in Canada without any tax consequences, it is quite a different affair for Canadians in the United States. Thus, it is important for Canadians holding assets in the U.S. to be informed about the rules underlying the donation, without which the noble intention of offering a present to someone you love can quickly turn into a poisoned gift.

The basic scheme of the tax on the donation is that a person who disposes of property for free or for less than the fair market value must pay a tax based on the full fair market value of the asset. Gift tax applies in the context of inter vivos disposition since the donation through testamentary disposition will be governed by the estate tax. Read the rest of this entry »

IRS Simplifies Compliance for Americans in Canada

Being an American citizen is, for many around the world, a highly sought after position. Some might call it a gift, though I doubt the United States IRS would classify it that way. In fact, for the IRS, American citizenship is only one half of the bargain. At least, this appears to be the mindset behind how the United States has structured its income tax laws. Unfortunately, American citizens are required to file a U.S. income tax return on all worldwide income and a Foreign Bank and Financial Accounts Reporting (FBAR), regardless of where in the world they reside.

Up until recently, most U.S. citizens residing outside of the United States were unaware of this responsibility. Though this responsibility has always existed, the IRS did not take an aggressive stance on it until 2011. Since then it has issued warnings that citizens found to be out of compliance with their income tax returns and FBAR may be subject to both civil and criminal penalties, plus interest on any taxes due. Read the rest of this entry »

David A. Altro and Matt Altro published in STEP Journal – June 2012

Canadian departure tax: obstacle or opportunity?

By David A. Altro, B.A., LL.L, J.D, D.D.N, Fin. Pl., TEP and Matt Altro, B.Comm., CFP®, F. PL.

Canadians move to the US for a variety of reasons. Proximity to family, lifestyle, sunny weather, employment, health issues and lower income tax rates are some of the more popular reasons. If tax is the main driver for a client to hang up their hockey skates in favour of a golf club, they will probably choose to live in a state with little or no state income tax, such as Florida.

The highest marginal rate for a resident of Quebec is 48.2 per cent (Ontario is 46.4 per cent). The highest marginal rate for a Florida resident is only 35 per cent. The tax savings are more pronounced when you take into account that a Quebec resident reaches the highest marginal rate at just CAD132,000 of income, while a Florida resident reaches the highest marginal rate only at income above USD379,000.

But before recommending a one-way ticket to West Palm Beach, it is important to understand the tax impact of becoming a non-resident of Canada. When a Canadian moves to another country and gives up tax residency in Canada this may give rise to a tax commonly referred to as departure tax. To better understand how this departure tax is calculated, a key concept of the Canadian tax system should be reviewed. Canadian residents are taxed on their worldwide income only while they are considered tax residents of Canada. Unlike the US, which taxes based on citizenship, when Canadians depart Canada they are no longer obliged to pay tax to Canada unless they continue to earn Canadian-source income. Canadians who depart Canada need to complete their final personal tax return (also known as an ‘exit return’) by 30 April of the year following their departure. Read the rest of this entry »

Pop Culture and the Trust by Bonnie L. Altro

While reading a recent edition of O Magazine, I came across Suze Orman’s monthly column. For those who don’t know, Ms. Orman is a financial expert and has written many books on financial prosperity. She was a frequent guest on The Oprah Winfrey Show and now has her own show on Oprah’s network. The column addressed how to be smart about your assets by protecting your estate from unnecessary costs and delays when you pass away. And what was her suggestion to achieve this peace of mind? A trust.

For most Canadians, owning property in a trust is a new concept. They have never thought of holding property this way, and when they hear about all of the benefits, they have a number of reactions. Some love the idea and start to question why their Canadian estates aren’t organized in the way we suggest that their U.S. estate be arranged. Some are less enamored by the concept of a trust and worry that the trust will cause complications in connection with the purchase or may scare off the seller. I assure them that this won’t be the case. I explain that using a trust to hold U.S. assets is not something we recommend to solely to Canadians, but that this is the recommended approach for Americans as well. And to back me up on this, like I do with so many things, I quote Oprah. Ok, maybe in this case, it is not Oprah directly, but Oprah’s trusted advisor, Suze Orman. Read the rest of this entry »

How Should Canadian Snowbirds Take Title to Arizona Real Estate? It Depends!

Canadians have long sought to escape harsh winters by spending time in the American Sunbelt. In recent years, with the dollar near parity, the depressed US real estate values, and a relatively strong Canadian economy, Snowbirds have shown stronger interest than ever in purchasing that winter get-away. The perennial question remains, however: what is the best way to own US real estate?

As usual, the answer is rarely straightforward. Each prospective buyer has a unique set of facts and different objectives to consider. Furthermore, the US real property laws, probate and incapacity are all governed at the State level, which means that the same strategy may not be appropriate in different States. This article focuses on Arizona law, and describes some of the options available to Canadian buyers of personal use properties, with a consideration of the advantages and disadvantages of each. Read the rest of this entry »

David A. Altro featured in the Montreal Gazette Monday, February 20, 2012

Tax Strategy: Marriage affects tax exemption on principal home

David A. Altro is a frequent contributor to Paul Delean’s business column in the Montreal Gazette. Click here to view the article online or scroll down to read David’s answers to the second and third questions.

The Gazette
Monday, February 20, 2012

The impact of marriage on the principal-residence exemption and tax obligations in the U.S. for Canadian citizens were among the topics raised in the latest batch of reader letters. Here’s what they wanted to know. Read the rest of this entry »

David A. Altro Published in STEP Journal – February 2012

Frozen Over
By David A. Altro and Ben Jeske

Estate freezes have been in Canada since the introduction of federal capital gains taxation 40 years ago. Along with the capital gains tax (CGT) on properties sold by taxpayers, the so-called death tax was also brought in. Essentially, when a taxpayer dies, they are deemed to have sold all their assets at fair market value, and will be assessed for CGT on all accrued gains. The estate freeze, in essence, is an attempt to cap the value of the assets owned by a taxpayer that would be subject to the death tax. Therefore, the estate freeze generally involves the conversion or exchange of assets susceptible to capital appreciation for assets that retain a fixed monetary value. Read the rest of this entry »