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Special considerations for Canadians in commercial real estate

Since the housing market crash in 2008, the state’s real estate market has been slowly recovering. As in many other states, our neighbors in the country to the north invest in real estate here in Arizona. Whether it is commercial property, residential property or multifamily property, there are certain considerations that need to be handled in any commercial real estate transactions.

Here in the United States, a single purpose limited liability company (LLC) is used to purchase commercial real estate. However, the Canadian government does not recognize LLCs. Adverse tax consequences often result when one of its residents invests in an LLC here in the United States.

There are ways to reduce the negative tax ramifications, but it often takes an attorney who is knowledgeable in — or who works closely with others who are familiar with — both American and Canadian tax and accounting laws to do so. For instance, it is often more advantageous for Canadians to become shareholders in an American corporation that will hold the title to the property. For others, becoming a partner in an American limited partnership in which the general partner is based in the United States may be the better option.

The only way to know for sure is to speak with an Arizona attorney who understands the challenges that Canadians face in the commercial real estate market in the United States. Not only do you need someone who can answer your questions and address your concerns, but you also need someone who can take care of the business and legal documentation you will need in order to complete the transaction. More information regarding these transactions is available on our website.

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