How to Invest in U.S. Real Estate from Canada
Who can invest from Canada under local rules, how money leaves the country, and how the income is taxed on both sides. General information for residents of Canada.
Not available to residents of Canada today. This page is not an offer, invitation or solicitation. It explains the rules that apply if you want to invest in U.S. real estate from Canada.
12 min read
Private real estate investments are illiquid, are normally held for several years and can lose capital, and distributions are never guaranteed. No Canadian securities regulator has approved or reviewed this page. Thresholds and tax rates reflect our understanding as at November 2026, may change, and are not legal, tax or investment advice.
Usually yes, if you meet Canada's investor test for private offerings. A Canadian resident who meets one of the accredited investor tests in National Instrument 45-106 can invest in income-producing U.S. real estate without a U.S. visa, by sending funds from a Canadian bank and subscribing for shares in a U.S. corporation that owns the property through a property-specific LLC.
Canada has no exchange controls, no cap on outward investment and no approval step, so the money's path is open. The gates are who may buy, which is the accredited investor exemption, and who may sell, which is a dealer registered in your province.
Dividends carry 15% U.S. withholding under Article X of the Canada-U.S. tax convention once a valid Form W-8BEN is on file, and Canada credits that tax against Canadian tax on the same income. The shares cannot be held in an RRSP, TFSA or FHSA.
The Canadian dollar floats against the U.S. dollar. Your bank converts at its rate on the day, distributions reach you in U.S. dollars, and your Canadian-dollar outcome moves with the exchange rate.
01 · Eligibility
Who can be offered private U.S. real estate investments in Canada?
Two tests apply at once: the accredited investor tests in National Instrument 45-106 (in Ontario, section 73.3 of the Securities Act), which decide who may buy without a prospectus, and the SEC Regulation S requirement that you are not a U.S. person.
✓Who qualifies under local rules
- Individuals who, alone or with a spouse, own financial assets worth more than C$1,000,000 before taxes and net of related liabilities. Financial assets are cash, securities and deposits: your home and other real estate do not count
- Individuals whose net income before taxes exceeded C$200,000 in each of the two most recent calendar years, or C$300,000 combined with a spouse, and who reasonably expect to exceed that level in the current year
- Individuals who, alone or with a spouse, have net assets of at least C$5,000,000. Real estate counts in this test
- Companies and other entities with net assets of at least C$5,000,000 on their most recent financial statements, holding companies whose owners are all accredited investors, and family trusts set up by an accredited investor for family members
- Non-U.S. persons only, buying as principal in offshore transactions under SEC Regulation S
×Who usually does not
- U.S. persons, who invest under different U.S. rules
- Retail investors who meet none of the accredited investor tests. No prospectus has been filed for these securities in any province or territory
- RRSP, RRIF, TFSA, FHSA, RESP and RDSP money. Unlisted shares of a private U.S. corporation are not a qualified investment for any registered plan
- Anyone who cannot complete KYC with a Canadian passport, driver's licence or provincial photo card and proof of a Canadian address
- Anyone who may need this capital back within one to two years
If you are resident in another jurisdiction for tax or regulatory purposes, that jurisdiction's own regime governs your position, and you should take advice under it before subscribing. Securities law in Canada is provincial, so your province or territory of residence decides which regulator and which local rules apply. In Quebec, standard-form contracts and related documents must be provided in French first. This page does not assess or advise on any investor's status under foreign law.
02 · The route
How a cross-border investment usually works
The five stages a resident of Canada typically goes through when investing in U.S. real estate. The legal work sits in stages one and two.
STEP 01
Complete identity checks (KYC)
Verify your identity with the platform or firm you invest through with a Canadian passport, a provincial or territorial driver's licence, a provincial photo card or a permanent resident card, plus proof of address. Your province or territory of residence is recorded first, because it decides which securities regulator's rules apply. Expect sanctions screening and a residence check before any offering is shown. Health cards are not used as identification, and your Social Insurance Number is not an identifier.
Passport or driver's licenceProvince of residenceProof of addressSTEP 02
Confirm you are an accredited investor
Choose the test you rely on: financial assets above C$1,000,000, net income above C$200,000 (or C$300,000 with a spouse), or net assets of at least C$5,000,000. Initials on a form are not enough on their own: the seller must take reasonable steps to verify the claim, so expect questions and supporting evidence. Individuals relying on those three tests sign the prescribed risk acknowledgement, Form 45-106F9, at or before signing the subscription agreement. The seller keeps the signed form for eight years.
Form 45-106F9Supporting evidenceTest relied onSTEP 03
Select the property and read the documents
Review the market, tenant, lease term, debt and business plan. The offering documents set out fees, holding period, distribution mechanics and the full risk factors. Securities bought under the accredited investor exemption carry resale restrictions in Canada, so plan to hold the shares until the property is sold and the corporation is wound up.
Offering memorandumSubscription agreementResale restrictionsSTEP 04
Subscribe and wire through your Canadian bank
You sign the Regulation S subscription documents and IRS Form W-8BEN, then send an international wire from a non-registered account in your own name. Your bank reports international transfers of C$10,000 or more to FINTRAC and to the Canada Revenue Agency itself, and the reports do not delay or block the wire. For a first large wire to a new U.S. beneficiary, your bank may ask about purpose and source of funds: the subscription agreement and wire instructions in your name answer that.
Form W-8BENNon-registered accountWire confirmationSTEP 05
Take ownership, collect distributions in USD
Your dollars purchase shares in the property-specific U.S. C-Corporation. The shareholding is recorded in your name and you receive ownership documentation. Distributions, when declared, are paid in U.S. dollars net of 15% treaty withholding, and you receive IRS Form 1042-S each year a distribution is made showing U.S. tax withheld. Keep it as proof for your Canadian foreign tax credit.
Subscription confirmationShare register entryForm 1042-SSEC Regulation S
03 · Qualification
Do you qualify as an accredited investor?
Canada imposes no cap on what you can send, so the gate is who you are. Any one test is enough, and every threshold is tested in Canadian dollars. This is a self-assessment, not a classification decision.
Tests applied: National Instrument 45-106 s. 1.1, accredited investor paragraphs (j), (j.1), (k), (l), (m), (t) and (w), and s. 2.3 (Ontario: Securities Act s. 73.3), as at November 2026. Form 45-106F9 is signed with the provider, never on this page.
The tests in law. A sale of newly issued securities to a Canadian resident needs a prospectus unless an exemption applies. The accredited investor exemption is in National Instrument 45-106 s. 2.3 and, for Ontario, in s. 73.3 of the Securities Act, with the same tests. For individuals the tests in s. 1.1 are: financial assets exceeding C$1,000,000, alone or with a spouse, before taxes and net of related liabilities (paragraph (j)); financial assets exceeding C$5,000,000 owned alone (paragraph (j.1)); net income before taxes exceeding C$200,000, or C$300,000 with a spouse, in each of the two most recent calendar years (paragraph (k)); or net assets of at least C$5,000,000, alone or with a spouse (paragraph (l)). Individuals relying on (j), (k) or (l) must sign Form 45-106F9 at or before signing the subscription agreement (s. 2.3(6)). Entities qualify under paragraphs (m), (t) and (w).
04 · Ownership
What an investor owns through a U.S. corporation
You are not on a deed. You hold shares in the U.S. company that stands between you and the building. That one distinction drives your rights, your tax and your exit.
A property-specific structure
Each property is held in its own U.S. limited liability company. The LLC is a pass-through for U.S. federal tax and pays no entity-level federal income tax.
A U.S. C-Corporation as your entry point
You subscribe for shares in a U.S. C-Corporation that holds the membership interest in the LLC. The C-Corporation is the taxpayer of record in the United States.
Why the corporation sits there
It acts as a blocker. You have no U.S. personal income tax filing obligation from holding shares or from receiving dividends, and U.S. withholding arises only when the corporation actually distributes cash to you.
The sponsor operates
The sponsor arranges financing, appoints the property manager, handles leasing and reports to investors. You do not manage tenants.
Exit is on sale, not on demand
There is no ready secondary market for these shares. Assume you hold until the property is sold and the structure is wound up. Section 06 sets out how that final step is taxed.
The structure, top to bottom
You
Canadian accredited investor
U.S. C-Corporation
You hold shares here. Taxpayer of record in the United States.
Property-specific LLC
Pass-through for U.S. federal tax. One asset only.
The property
Income-producing U.S. real estate
05 · Documents
What a provider will ask for
What a provider will typically ask a resident for. Tap to tick them off as a checklist for your own planning.
06 · Tax
Taxed at the U.S. corporation, then in Canada with a credit
The property is in the United States, so U.S. tax applies there first, at the corporation. The Canada-U.S. tax convention then cuts withholding on your dividends from 30% to 15%, and Canada credits the tax withheld against Canadian tax on the same income.
The U.S. taxes it at the corporation
Rent is earned in the United States, so U.S. tax applies. It is paid by the C-Corporation before anything reaches you, which is why no annual U.S. return is needed when your only U.S. income is dividends with the correct tax withheld.
The treaty cuts withholding to 15%
Dividends carry 15% U.S. withholding under Article X of the Canada-U.S. tax convention instead of the statutory 30%, once a valid Form W-8BEN is on file. On unlisted shares the treaty claim needs a tax identification number on the form: your Social Insurance Number or a U.S. ITIN.
Canada taxes the dividend, with a credit
The gross dividend is income at your full marginal rate, like interest. The 15% U.S. tax withheld is a foreign tax credit against Canadian tax on that income. There is no dividend tax credit, and Canada gives no relief for the U.S. corporate tax.
6.1Rent arrives at the LLC
In the United States
No entity-level federal income tax. Income passes through to the C-Corporation, after depreciation and operating deductions.
In Canada
Nothing applies. You hold shares in the C-Corporation, not the LLC.
6.2The corporation is taxed
In the United States
Federal corporate income tax at 21% of taxable income. State corporate income tax may also apply, depending on where the property sits.
In Canada
Nothing applies to you. Canada does not tax the C-Corporation, and an individual gets no Canadian credit for the U.S. corporate tax it pays.
6.3Cash is distributed to you
In the United States
Withholding at 15% under the Canada-U.S. tax convention (Article X) instead of the statutory 30%, once a valid Form W-8BEN carrying your Social Insurance Number or a U.S. ITIN is on file. Without one, 30% is withheld. You receive Form 1042-S. An ordinary dividend is not a FIRPTA gain.
In Canada
The gross dividend, before U.S. withholding and converted to Canadian dollars, is income at your full marginal rate. Foreign dividends do not qualify for the gross-up and dividend tax credit.
6.4You claim the credit
In the United States
Nothing further. The 15% withheld is your final U.S. tax on the dividend, and no annual U.S. return is needed for it.
In Canada
The 15% withheld is a federal foreign tax credit (Form T2209), with any balance going to the provincial credit. Tax withheld above the treaty rate is not creditable in Canada and must be reclaimed from the IRS. Unused credit on this kind of income cannot be carried to another year.
6.5Earnings are retained instead
In the United States
No withholding arises until an actual distribution is made.
In Canada
The foreign accrual property income (FAPI) rules apply only to a controlled foreign affiliate, and a holder of less than 1% is never caught. The offshore investment fund property rule (Income Tax Act s. 94.1) exists and turns on whether tax deferral was a main reason for investing: ask your adviser about it.
6.6The property is sold and the structure wound up
In the United States
The expected position is that no withholding applies to the final liquidating distribution, under the cleansing rule at IRC section 897(c)(1)(B), once the sale has closed and the gain has been taxed at the corporation at 21% plus any state tax. Selling or gifting your shares before that point would be a taxable FIRPTA disposition, with 15% of the amount realised withheld by the buyer.
In Canada
For a portfolio holder, the cancellation of the shares is a disposition and the liquidating distribution is proceeds. One-half of a capital gain is included in income. Proceeds and cost are each converted at the exchange rate of their own date, so currency movement is part of the gain. Take advice on the facts.
6.7Death of the shareholder
In the United States
Shares in a U.S. corporation are U.S.-situs assets for a non-resident's estate, with a USD 60,000 exemption by default and rates up to 40%. Under Article XXIX B of the convention, a Canadian resident's estate instead gets a share of the full U.S. unified credit, prorated by U.S. assets over worldwide assets, if it discloses worldwide assets to the IRS. Form 706-NA is due within nine months where U.S.-situs assets exceed USD 60,000, even if no tax is due.
In Canada
Canada has no estate or inheritance tax. Capital property is deemed sold at fair market value immediately before death, with one-half of the gain on the final return, deferred where the shares pass to a spouse or common-law partner. The convention gives a credit for any U.S. estate tax against Canadian tax on U.S.-source income and gains in the year of death.
6.8Foreign property reporting
In the United States
Nothing applies.
In Canada
The shares are specified foreign property. If the total cost of all your specified foreign property is more than C$100,000 at any time in the year, you file Form T1135 with your return. Under C$250,000 throughout the year, the simplified part of the form is enough. Penalties apply for late filing.
Registered plans. Unlisted shares of a private U.S. corporation are not a qualified investment for an RRSP, RRIF, TFSA, FHSA, RESP or RDSP. Holding them in a registered plan triggers a penalty tax of 50% of the value of the shares when acquired. The investment must be made with non-registered money.
Investing through a Canadian company or family trust instead of personally. A Canadian private company holding less than 10% of the voting stock is taxed on the dividend as investment income, with the same 15% treaty rate and a foreign tax credit, and running U.S. dividends through a private company generally costs more in total than holding personally once the cash is paid out. A company that owns at least 10% of the voting stock can claim the 5% treaty rate and falls under the foreign affiliate rules, with Form T1134 in place of T1135. A family trust pays the top rate on income it keeps, gives Form W-8BEN-E and must meet the treaty's limitation on benefits test. Decide the vehicle with your adviser before subscribing.
07 · FAQs
Clear answers
This page is general information, not legal or tax advice. Nothing here determines your tax residency, your U.S. person status, your accredited investor status or your eligibility to invest. Those are questions of law that depend on your own circumstances, and they are settled by the applicable rules and by your own professional advisers, not by Raveum. Descriptions on this page reflect our understanding as at November 2026 and may change. Take your own legal and tax advice before you act on anything you read here.
Investing in U.S. real estate from Canada
Not available to residents of Canada today. This page is not an offer, invitation or solicitation. Our guides explain U.S. real estate in more depth.
No Canadian cap on outward investment
15% treaty rate with a valid W-8BEN
No annual U.S. return for dividends