Q: What foreign taxes must a Canadian pay for a investment rental property on Guam? LLC company w local shareholder partner
Canadian buying investment rental property in Guam with a local resident as a partner in LLC. What foreign taxes, local taxes etc are paid by Canadian.
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A:
When owning an investment rental property in Guam through an LLC with a local partner, you will likely need to pay taxes both in Guam and potentially in Canada. In Guam, you can expect to pay federal taxes, as Guam follows the U.S. tax system. This includes taxes on rental income and potentially self-employment taxes if your LLC is treated as a partnership or disregarded entity for tax purposes. Additionally, there may be local property taxes, which are typically based on the assessed value of the property.
Since you're Canadian, you may also need to report your foreign rental income to the Canada Revenue Agency (CRA). Canada has a tax treaty with the U.S. to prevent double taxation, meaning you can usually claim foreign tax credits for taxes paid in Guam. You should be prepared to report this income and expenses on your Canadian tax return, as Canadian residents are taxed on their worldwide income.
It’s essential to be aware of any specific requirements or obligations both in Guam and Canada, such as reporting the LLC’s financials. You may also need to look into Guam's tax treatment of LLCs and any potential withholding tax on rental income. Make sure to comply with both jurisdictions to avoid penalties.
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