Episode 111: The Canadian CPA Side of Real Estate with Michael Matthew
Summary
Many real estate investors in Canada eye buying real estate in the US..... because they have no idea where to start. And what about taxes in the US? How to avoid paying double taxes, both in the US and in Canada? My guest today has written a how-to book called "Eh to Zen Real Estate" for Canadian real estate investors. On today's show I talk with Toronto-based CPA Michael Matthew about how Canadian investors can make some smart investments in the US.
Listen to full episode :
This Week’s Blog Post:
Exploring Real Estate with a CPA Twist
Hello there, I'm Doctor Jen, and welcome back to another episode of "My Life as a Landlord." Today, we're diving into the intricate world of real estate from a Canadian CPA perspective with our guest, Michael Matthew. Michael brings a unique blend of expertise, not only as a CPA but also with a robust understanding of cross-border real estate investments. He offers invaluable insights, especially for investors like myself who navigate both the Canadian and American real estate markets.
The Impact of Tariffs on Real Estate
Our conversation began with a light-hearted discussion about current political climates and potential tariffs, but it quickly turned to how these could realistically affect real estate investments. Michael pointed out that tariffs, if imposed, could significantly impact building materials costs, directly affecting real estate development and investment costs. This scenario underlines the interconnectedness of global politics and local real estate markets, emphasizing the need for investors to stay informed about international affairs.
Debunking the Myth of Passive Real Estate Investing
One common misconception that Michael addressed is the idea of real estate investment being entirely passive. He clarified that if you own real estate directly, there's always some level of active involvement required, whether it's managing property managers or dealing with unexpected repairs. For truly passive real estate investments, Michael suggested looking into private equity deals where you can invest money and receive returns without the day-to-day management responsibilities.
The Importance of Structure in Cross-Border Investments
We delved deep into the structure of cross-border investments, particularly how Canadians can invest in U.S. real estate without falling into the double taxation trap. Michael introduced his innovative 'Triple C' strategy, which involves a Canadian corporation owning a U.S. C corporation that, in turn, owns the U.S. property through an LLC. This structure optimizes tax advantages while providing legal protection and is a brilliant strategy for Canadians looking to invest in the U.S. real estate market.
Real Estate as a Business
Michael stressed that real estate investment should be treated as a business, where decisions are made based on numbers rather than emotions. He also touched on the legal implications of various investment decisions, such as the potential pitfalls of not conducting property inspections before purchases. His insights underscore the importance of due diligence and the right financial structuring to ensure profitability and legal compliance in real estate investments.
As we wrapped up our discussion, Michael reminded us that real estate investing, while potentially lucrative, requires education, careful planning, and sometimes, learning from mistakes. Whether you're dealing with residential properties or complex commercial deals, the right approach can make all the difference. Join us next time as we continue to explore more aspects of real estate and landlord education on "My Life as a Landlord."