Many Canadian snowbirds who purchase Palm Springs area property wish to rent out the property during the time when they can’t use it personally (or maybe rent it out all the time). I think it’s a great idea, primarily because if the snowbird plays his or her cards right, they can receive rental income and possibly owe $0 tax on the income in the United States- a great deal. But if you’re going to let strangers use your property as business guests, in these days of excess lawsuits, you have to protect yourself. Insurance is a must, but insurance will only protect you to a certain point. It is possible a court could award a settlement of a far higher amount than the value of your US house or your insurance. Next, the injured renter wants every penny you have to compensate for the injury. Finally, I am asked from time to time whether a judgment from a California court could ever be enforceable in Canada? The answer is it is possible for a judgment from a California court to be enforceable in Canada. So Canadians, like Americans, need to be careful about how they conduct their US businesses, just like they need to careful about how they conduct their Canadian businesses.
So Let’s Review Our Various Ownership Forms From a Liability Protection Perspective
Ownership as an Individual, as Joint Tenants or Tenants in Common– If you are going to rent out your property to strangers regularly, none of these basic forms of homeownership is likely a wise idea. In each case, the owner can be sued in his or her personal capacity (it’s either one or multiple individuals who own the property), and that means (in a worst case scenario) you could lose all your personal assets.