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Hi there. I live in British Columbia Canada and do real estate investing in the United States. I dont actually buy and hold any properties, just fix and flip and wholesale. I dont currently have a business set up in either country and am wanting to know the best way to do this. I do have business partners there that I work with and now that money is starting to come I want to make sure this is set up the correct way. Thanks in advance.
You have two options of doing business in the US:
US Limited Partnership
You can flip homes in the US through a US LP. With this set-up, you will avoid double taxation and limit your liability. However, you will not be able to defer taxes. Income earned in the year is taxable to you, even if you don't receive any cash distributions from the US LP.
US C-Corporation
You can flip homes in the US through a US C-corporation. The US C-corporation should be 100% owned by a Canadian holding corporation. You will be the sole shareholder of the Canadian holding corporation. With this setup, you will avoid double taxation and limit your liability. AND, you will be able to defer taxes, because you will only pay personal taxes on dividends that you personally receive.