Working Canadians who buy property in Florida will most likely not be able to visit for more than a few weeks several times a year. To get the most of your investment, you will want to rent out the property. However, any income made from renting out property in the U.S. and payable to a resident of Canada is subject to a 30% withholding tax. The withholding tax is a means to avoiding tax evasion. If you rent out the property, the income from that rent will be collected by an agent. This agent who collects rent for a foreign owner is known as the withholding agent. The agent will be responsible for any tax which needs to be withheld. The advantage of the 30% withholding tax is that the Canadian owner does not have to file a U.S. tax return but he will not be able to deduct any expenses.
There are ways for Canadians to avoid the 30% withholding tax. They can file a U.S. tax return and choose to pay tax on net rental income. The Canadian resident can then receive a refund for any taxes withheld, so long as the withholding amount exceeds the tax payable. Boyer Law Firm has all the correct forms and procedures in order for you to have the taxes withheld.
If you are interested in renting your property in Florida, please contact Boyer Law Firm, as we will be happy to help you in your needs.