Capital gains as a foreigner

[Fernando Fiscina]

Hello, I'm planning on purchasing a property in Tampa Bay. My plan is to flip the property, rent it out for a bit and sell it within 2-3 years. Being Canadian, what would be the non-resident withholding tax on the sale of the property? I've been reading that if the property is sold under 300k to someone who will use it as their primary residence, no withholding tax will be taken. What would happen in different situations? Would I be double taxed in both the US and Canada?

[Roy N.]

@Fernando Fiscina

Intent plays a role, so you would be purchasing and renovating with the intention of holding the property as a rental (nudge, nudge).  In that instance, when you sell, you will be looking at capital gain.

If your intention is to renovate and sell (aka "flip"), then the property is considered inventory and not a capital asset.  Any proceeds would be taxed as income, however all your costs would be deductible as business expenses (cost of goods sold).

How you will be taxed in the U.S.A. is best explained by @Brandon Hall or @Steven Hamilton II.

How you are credited for that tax when you repatriate your earnings is covered here.

If this venture is to be more than a one-off occurrence, then you may want to invest some time and a few hundred dollars with an accountant and attorney here at home who specialize in cross-boarder real estate / business.  If you plan to build a business in Florida, you may want to incorporate an entity in the U.S.A. and retain all your earnings in-country.   How you hold ownership of that U.S.A. entity (i.e. directly or through a CCPC) will play a roll in how retained earnings will be taxed (and when) when finally repatriated to Canada.