How Canadians Can Invest in US Real Estate the Right Way

More Canadians are buying rental properties in the United States. And it makes sense why. Ontario’s landlord-tenant board can take over a year to evict a problem tenant. Meanwhile, landlord-friendly states like Texas can complete the same process in about three weeks.

But jumping into U.S. real estate without the right structure can cost you thousands in unnecessary taxes. Here’s what you need to know before you buy.

Why Ontario Investors Are Looking South

Two main reasons are driving this trend:

First, the landlord-tenant board makes removing problem tenants nearly impossible. Even after winning your case, the process drags on. Police won’t help enforce evictions. You’re often stuck paying tenants to leave—which shouldn’t be how things work.

Second, U.S. properties offer better entry points. You can find cash-flowing properties starting around $200,000. Compare that to the Greater Toronto Area where you need serious capital just to get started.

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Start With Your Investment Goals

Before setting up any corporate structure, ask yourself: what’s your goal?

Buying one or two properties mostly for personal use with some rental income? You probably don’t need a complex structure.

Building a real estate business with multiple rental properties and planning to reinvest U.S. income? You need proper corporate setup. This protects your assets and saves you from double taxation.

The Triple C Structure Explained

This three-layer approach is what serious canadian investors need. Here’s how it works:

Layer 1: Canadian Corporation

Start with a numbered Ontario corporation (or your home province). It doesn’t need a fancy name because nobody will see it. It’s just a holding entity. Setting this up takes about a week.

Layer 2: Wyoming C Corporation

Your Canadian corporation owns a C Corporation in Wyoming. Why Wyoming?

Zero corporate income tax
Zero personal income tax
Low registration fees (hundreds, not thousands)
Fast setup (2-3 days when things go smoothly)
Strong privacy protections
Asset protection through charging order laws

If you don’t distribute money from your Wyoming corporation, creditors can’t penetrate it to grab your assets. They can only intercept distributions when money actually leaves the company.

Layer 3: The LLC

The LLC actually holds title to your property. Your Wyoming C Corporation owns this LLC.

Buying in Florida? Set up a Florida LLC. This LLC is a “disregarded entity” that flows income to your Wyoming C Corporation. You only file one U.S. tax return—for the Wyoming corporation.

Why You Can’t Skip the C Corporation

Some investors think they can just use an LLC and save money. Bad idea.

If you own an LLC directly as a Canadian, the Canada Revenue Agency won’t let you claim foreign tax credits on your personal return. They see those as corporate tax credits from a corporate entity. This creates a mismatch that gets rejected.

The result? Double taxation or worse.

The C Corporation solves this problem. It sits between you and the LLC, keeping everything aligned properly.

Multiple Properties Need Multiple LLCs

You want separate LLCs to protect your assets. A lawsuit against one property shouldn’t threaten your whole portfolio.

The general rule: once properties in a single LLC total $500,000 to $1,000,000 in value, create another LLC for new acquisitions.

Ten separate single-family homes carry less risk than one ten-unit apartment building. Spreading tenants across different properties and different legal entities protects you better.

What About Different States?

You don’t need a new LLC for each state. If you have a Florida LLC and buy in Ohio, you can use the same Florida LLC. Just register it in Ohio as a “foreign corporation”—a simple process costing $100-300.

Timing Is Critical: Set Up Before You Buy

Here’s a mistake that costs investors deals: waiting to find a property before setting up entities.

The problem? You need an Employer Identification Number (EIN) from the IRS. Even with no employees, you need this number. And you can’t open a U.S. bank account without it.

How long does the IRS take? Two to three weeks normally. But during tax season (March through May)? Two to four months.

Imagine finding the perfect property but losing it because you’re waiting for the IRS. Set up your structure first if you’re committed to investing.

The timeline looks like this:

Canadian corporation: about 1 week
Wyoming C Corporation and LLC: about 2 weeks
EIN from IRS: 2-3 weeks minimum (possibly months)

The Biggest Mistakes to Avoid

Taking Title in Your Personal Name

This is the worst mistake. Buying rental property in your personal name seems simpler, but moving it to an LLC later triggers capital gains tax.

One investor bought in a Florida growth area. One year later, the property appreciated over $100,000. Moving it to an LLC would have triggered tax on half that gain—a massive unnecessary bill.

Always set up the LLC first. Take title in the LLC name from day one.

Missing Information Returns

The U.S. system requires various information returns that don’t involve taxes but are mandatory anyway. Miss one and you might get a $10,000 demand letter from the IRS.

Even if your accountant filed everything correctly, the IRS might send automated demands anyway. Their left hand doesn’t always know what the right hand is doing.

This is why you need professionals who understand both Canadian and U.S. requirements.

Picking the Right State

Before looking at taxes or Appreciation, check one thing first: Is the state landlord-friendly?

Avoid these tenant-friendly states:

California
New York
New Jersey

These states mirror Ontario’s problems. Evictions take a year or more.

Popular landlord-friendly states include:

Texas (evictions in 3 weeks)
Florida
Georgia

What About Taxes?

Federal corporate tax is 21% everywhere. State taxes range from 0% to about 12%.

Interestingly, the highest-tax states are the same ones that are tenant-friendly. So avoiding tenant-friendly states also means avoiding high state taxes.

Why Not Wyoming for Properties?

Wyoming has zero state income tax, so why not buy properties there?

Wyoming is the least populated state in the country. There’s no demand. Limited demand means limited appreciation and difficulty selling.

Wyoming works perfectly for your holding corporation. But buy your actual rental properties where people want to live.

Don’t Go It Alone

Setting up cross-border structures isn’t a DIY project. You need coordination between Canadian and U.S. professionals who understand both systems.

The cost of proper setup is tiny compared to the taxes and legal problems you’ll face without it.

As your portfolio grows, professional bookkeeping becomes essential too. Your strength is finding and funding properties. Let professionals handle the paperwork so you can focus on what you do best.

The Bottom Line

U.S. real estate offers real opportunities for Canadian investors frustrated with our tenant-friendly system. But success requires proper structure from day one.

Set up your entities before you start shopping for properties. Choose landlord-friendly states. Work with professionals who understand both tax systems. And never, ever take title in your personal name.

Get the structure right, and you can build a profitable U.S. portfolio while protecting your assets and minimizing your taxes.

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Frequently Asked Questions

Why are Canadian real estate investors buying rental properties in the United States?

Canadian investors are drawn to U.S. rental properties for two main reasons: faster tenant eviction processes in landlord-friendly states (as quick as three weeks compared to over a year in Ontario), and more affordable entry points with cash-flowing properties available starting around $200,000.

What is the Triple C corporate structure for Canadian investors buying U.S. real estate?

The Triple C structure consists of three layers: a Canadian holding corporation, a Wyoming C Corporation owned by the Canadian corporation, and an LLC that holds the actual property title. This structure provides asset protection, tax efficiency, and proper alignment between Canadian and U.S. tax systems.

Why do Canadian investors need a C Corporation instead of just an LLC?

If Canadians own a U.S. LLC directly, the Canada Revenue Agency won't allow foreign tax credits on personal returns because they classify LLC taxes as corporate credits. This mismatch leads to double taxation. A C Corporation between you and the LLC keeps everything properly aligned for both tax systems. Also seek advice from a tax professional.

Which U.S. states are best for Canadian real estate investors?

Landlord-friendly states like Texas, Florida, and Georgia are popular choices. These states offer faster eviction processes and typically have lower state taxes. Avoid tenant-friendly states like California, New York, and New Jersey, which have eviction timelines similar to Ontario's problems.

Why should I set up my corporate structure before finding a U.S. property?

You need an Employer Identification Number from the IRS to open a U.S. bank account, and this can take two to four months during tax season. Setting up your Canadian corporation, Wyoming C Corporation, LLC, and obtaining your EIN before shopping prevents losing deals while waiting for paperwork.

What happens if I buy U.S. rental property in my personal name?

Buying in your personal name and later transferring to an LLC triggers capital gains tax on any appreciation. If your property gains $100,000 in value, you could face a massive tax bill just to restructure. Always take title in your LLC name from day one to avoid this costly mistake.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

December 22, 2025