Structure to invest in a US syndication for Canadians

[Doïna B.]

Hi everyone,

I'm a Canadian interested in investing in a US multifamily syndication. The issue is that most syndications are structured as LLCs, which are not recognized by the Canada Revenue Agency. 

If I were to invest directly in a LLC, that would result in double taxation.

To bypass double taxation, do I absolutely have to invest in syndication that is structured as a LP (which greatly limits my choices), or can I set up an LP in Canada that will 'hold' the LLC?

Thank you in advance!

[Evan Polaski]

I have a friend that is a Canadian citizen and resident.  He has invested both directly in RE in the US and into syndications as an LP.  While I don't know all the details, he setup an personal limited partnership where he invested in the LP and his wife acted as the GP.  That partnership then held title on the direct investments and in the syndications. 

He is currently working, and at the time was working in the US.  His wife did not work, which I think had something to do with why she was the GP in the their partnership.  But in the details he provided, the whole point was, as you mention, to minimize any double taxation issues that could arise.  

He worked with an attorney (no, I don't know who) that understood the Canadian citizenship tax issues, and that attorney helped setup their structure.  Given the prevalence of Canadians investing in US real estate, I would imagine there are many attorneys on both sides of the boarder that are familiar and can help guide you in the most tax efficient structures for your goals.