Setting Up a Business Structure with a Foreign Investor

2 Replies

Hi all,

A business partner (from Canada) and myself (lives in Illinois) are looking to invest in buy-and-hold properties here in Illinois.  I was looking for insight on what would be the best business structure (e.g. LP, C Corporation, S Corporation, other) for this situation?  Key considerations are cost and complexity.

I did review the following post which discussed investing with a partner, but wasn't sure if working with a foreign investor is any different.

Thank you in advance!

Hi Bobby,

I'm a Canadian and have been doing this same thing for years (setting up partnerships with Canadians to buy US property). I'm not an attorney or accountant so you both should talk to cross-border ones to make sure you each do what is best for your specific situation. 

LP is what I use and is most likely going to be your best bet. The general partner being either a C corp or LLC and then you both listed as limited partners. This is because when a Canadian owns US real estate in his/her own name or a partnership then when they pay the IRS, they receive a tax credit towards their Canadian taxes. BUT if the real estate is owned in any type of company (LLC, C or S corp) then that same tax credit does NOT apply. They will end up being double taxed by having to pay taxes to the IRS and then again to CRA.

Hopefully you and your partner can learn from my expensive mistake! lol

I'd be happy to help you with any cross border referrals. Good luck!

Thanks Michael, this is super helpful!

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