Scott Dillingham is a mortgage expert who has helped clients finance over $1 billion in real estate across Canada. In this episode of The Wisdom Lifestyle Money Show, Scott sits down with Dave Peniuk of Westpac Wealth Partners to tackle one of the biggest blind spots in cross-border real estate investing: U.S. estate tax exposure for Canadians who own rental property, vacation homes, or business assets in the United States.
If you're a Canadian investing in U.S. real estate, you may already analyze cash flow and appreciation — but what happens to your heirs if you pass away with American assets? Dave explains how foreign nationals face a minimal U.S. estate tax exemption (roughly $60,000 for non-residents) compared to the much higher domestic threshold, and how estate tax can be assessed on the full property value at death — not just the gain, as in Canada. For a $250,000 Michigan rental, that could mean a five-figure IRS bill your family must pay before inheriting the asset.
Dave walks through a whole life insurance strategy designed for foreign nationals with a financial tie to the U.S. — including death benefit coverage to pay estate taxes, tax-free proceeds to beneficiaries, and a cash value component that grows in U.S. dollars and can be accessed via policy loans for property repairs or emergencies. Scott and Dave also cover the Canada-U.S. tax treaty, deemed disposition in Canada, when the strategy makes sense versus a quick flip, and how to size coverage based on property value and appreciation.
Key Takeaways
- Canadians who own U.S. real estate may face U.S. estate tax on the full asset value at death — not just capital gains like in Canada.
- Foreign nationals get only a ~$60,000 U.S. estate tax exemption unless treaty planning applies — a major gap most investors ignore.
- A properly structured whole life policy can deliver a tax-free death benefit to cover IRS estate tax bills so heirs don't have to sell the property.
- Cash value grows in U.S. dollars, helping Canadians hedge currency risk and fund property expenses via policy loans.
- Cross-border real estate investing requires asset protection planning — not just acquisition and cash flow analysis.
- The strategy suits long-term holders and portfolio builders more than one-off flips.
- Canadians with an EIN, U.S. business ties, or multiple properties are strongest candidates — speak with a cross-border tax professional.
- Westpac Wealth Partners works with foreign nationals from many countries, not only Canada.
Links and Show References
Dave Peniuk — Westpac Wealth Partners — WestpacWealth.com (Las Vegas office) — LinkedIn: Dave Peniuk
If you own or plan to buy U.S. rental property as a Canadian investor, estate tax and cross-border planning should be part of your return calculation — not an afterthought. The team at LendCity helps Canadian real estate investors with creative mortgage solutions, including financing for cross-border and portfolio growth strategies. Visit LendCity.ca to book a free strategy call and get expert guidance tailored to your situation.
