Canadians are among the largest foreign holders of US real estate — from Florida condos to Arizona vacation homes to rental properties in Sun Belt states. Owning US real estate as a Canadian requires an ITIN for multiple IRS compliance obligations, including FIRPTA withholding, rental income, and property sales.
FIRPTA: The Foreign Investment in Real Property Tax Act
When a Canadian sells US real property, the buyer (or buyer's agent) is required by law to withhold 15% of the gross sales price (not profit — the entire sales price). This is FIRPTA withholding, designed to ensure foreign sellers pay US capital gains tax. Your ITIN is required to:
- Certify your foreign status to the withholding agent
- Apply for a FIRPTA Withholding Certificate (Form 8288-B) to reduce withholding if the actual tax owed is less than 15%
- File a US tax return to report the actual gain and potentially recover over-withheld amounts
Rental Income from US Property
If your US property is rented, you must file a US tax return (Form 1040-NR) annually to report rental income. Your ITIN is the Tax ID on this return. Without an ITIN, you cannot file a US return — and the IRS issues penalties for failure to file on rental income.
You may be able to deduct mortgage interest, property taxes, depreciation, management fees, and repair costs against your US rental income, potentially reducing your US tax to near zero.
Canada-US Treaty on Real Estate Income
The Canada-US Tax Treaty allows rental income from US property to be taxed in the US (where the property is located). It prevents double taxation by allowing a Canadian foreign tax credit for US taxes paid on US rental income. Your Canadian tax return reports the US income, and the Canadian tax credit prevents paying twice.
ITIN Plus for Canadian Real Estate Investors
$99, 8–14 weeks, IRS Certified Acceptance Agent. We serve Canadians with Florida, Arizona, Nevada, and other Sun Belt real estate investments. Email apply@itinplus.com.
Frequently Asked Questions
Do Canadians need an ITIN to own US real estate?
An ITIN is required when you need to file a US tax return (for rental income), apply for FIRPTA reduction certificates, or report a property sale. You can own US property without an ITIN, but operating it as rental or selling it requires one.
What is FIRPTA and how does it affect Canadians?
FIRPTA (Foreign Investment in Real Property Tax Act) requires 15% withholding on the gross sales price when a foreign person (including Canadians) sells US real property. Your ITIN is required to file a US return to report the actual gain and potentially recover over-withheld amounts.
Can Canadians deduct expenses against US rental income?
Yes. Mortgage interest, property taxes, depreciation, management fees, insurance, and repairs are deductible against US rental income on Form 1040-NR. Consult a US CPA familiar with Canadian real estate investors for your specific situation.
How long does it take to get an ITIN?
8–14 weeks from the IRS submission date. Apply through ITIN Plus for $99.
Does Canada tax US rental income?
Yes. Canadian tax residents pay Canadian tax on worldwide income, including US rental income. However, the Canada-US Tax Treaty allows a Canadian foreign tax credit for US taxes paid on US property income, preventing double taxation.