The Canada Revenue Agency's (CRA) recent change to its
position on the classification of two popular entities for U.S.
real estate investing has thrown a wrench into tax structure
planning for Canadian investors.
Until recently, U.S. limited liability partnerships (LLPs) and
limited liability limited partnerships (LLLPs) were attractive
options for Canadians investing in U.S. real estate. These U.S.
state-governed entities provide liability protection to investors
while still allowing for the flow-through treatment of income
directly to their partners.
On May 26, 2016, at the 2016 International Fiscal Association
Conference CRA Roundtable, the CRA announced its long-anticipated
conclusion to the analysis of the appropriate classification of
LLPs and LLLPs governed by the state laws of Florida and
Delaware1. In what was a shock to many tax practitioners
and taxpayers, the CRA concluded that these two types of entities
share more of a likeness with Canadian
