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The Millionaire Engineer: Chapter 1

A Home Away from Home

Many of the most successful people in the world were once told that they could not or should not. Sometimes I wonder if most people had received the support they desired – they’d rule us all.

With no predisposition to affluence and prosperity of any kind, my old friend and I had a lot in common.However, post high school, while the rest of us were finding our way, he had long disappeared into the library for years of academic boot camp. Turns out, he really was in training.

As I reflect I’m reminded of one of his recent e-mails, with the usual mentions: that I should be there on the beach with them instead of at my computer and that Montreal were, in his opinion, still the worst team on the ice. He had attached a photo of himself and Marg, waving from their beach chairs on the deck of their new hot spot in Boca Seaga Bay.If anyone deserved to bask in the sun ...it was Marg. (I kid.) It was after all, their joint decision to invest in a second property.

Just as things down south were really beginning to heat up, my recommendation to purchase there came with many questions, like this one:

Could a Canadian Citizen be
subject to US Estate tax?

Many Canadians are flying south and quickly purchasing real estate without ever knowing that they are potentially making the IRS a silent beneficiary of their estate. Canadians that own Real Property situated in the U.S. are subject to potential taxation of up to 35% of the value. By establishing one of the following; a Canadian Corporation, Canadian Partnership or a Canadian Discretionary Trust – and working through the pros and cons of each structure – they soon found a beautiful property, which they later purchased through their Discretionary Trust.

Recently we held an information session where we spoke to many clients and friends about The Tax Implications of buying US Real Estate. Were you there? If so, my colleagues and I hope you learned a lot. Here is the most popular question that was asked:

Is it true that if I spend over 6 months
in the US I could be considered a
US resident for tax purposes?

There is a test in the US referred to a "Substantial Presence Test" which applies to a non-resident alien, in which the IRS will deem them to be considered a US resident for tax purposes. Generally, if you are in the US for a period of 183 days you can be considered a US resident. As always, there are related details to discuss, but knowing that definitely contributed to how my old friend and his wife structured their time away.

In each and every one of my e-mail replies – whether I throw in a jab at his much-tortured Leafs or not (ok, I always do) – I usually remind him to relax and to enjoy. Tomorrow is never promised, but as you will come to learn in my upcoming editions, for The Millionaire Engineer, it has been well planned for.

To your future,
From Tom

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