EP422 How to Reduce Your Taxes on a Rental Property in the USA with Tim Miron

In this episode of Canadian Investing in the US, host Glen Sutherland welcomes recurring guest and CPA Tim Miron of Pursuit CPA to discuss strategies Canadian investors can use to reduce taxes on U.S. rental properties. Tim explains the difference between passive and active income taxation, noting that rental income earned inside a corporation can be taxed at rates approaching 50%, while active business income in a Canadian corporation may be taxed as low as 12% in Ontario. The conversation focuses on a strategy where a Canadian corporation acts as a property management company for U.S. rental properties, charging management fees to the U.S. entity and converting part of the rental income into lower-taxed active income. Tim emphasizes the importance of charging realistic management fees, maintaining proper invoicing, and ensuring the arrangement reflects legitimate property management activity. Glen and Tim also discuss practical considerations such as bookkeeping complexity, moving money consistently between entities, and how these strategies change depending on whether investors are holding stabilized rentals, actively renovating properties, or operating other active businesses. Tim explains that rehab projects may justify significantly higher management fees due to the increased workload, while investors already generating active business income through flipping or property management may have alternative tax planning options available. Throughout the episode, the two stress the importance of proper structuring and working with experienced cross-border tax professionals to ensure compliance and maximize tax efficiency for Canadian investors operating in the U.S. real estate market.