Transcription of Episode
Intro/Outro 0:04
Welcome to Investing Across Borders with Lauren Cohen. Every week she will share valuable
information that you need to know in order to successfully invest in real estate and other
business endeavors in North America. We believe in helping clients invest, live, work, and play
across borders. And now, your host, Lauren Cohen.
Lauren Cohen 0:27
Good morning, everybody from sunny South Florida. I’m Lauren Cohen, international legal and
real estate investment expert. And I am here as host of Investing Across Borders, the podcast,
where we teach you how to invest, live, work and play across borders. Because after all, what is
all the investing for if not to play? And today I am here with my good friend, strategic partner,
and tax advisor Elliot Milek. Elliot, why don’t you just say “hi”, and tell us a little bit about how
happy you are to be here in South Florida at this time of year.
Elliot Milek 1:00
Thank you for the warm introduction. It’s been a long process for me and my wife to get down
here to be honest. We started this whole visa process a few years ago, at least discussing it
with our legal team. And you know, COVID certainly delayed a few things for us. But we’ve been
fortunate to get down here, got our visas this past June, we’ve been down here since August.
So we’re certainly enjoying it in November. We don’t have to worry about the snow or the rain.
But yeah, it’s been a long process. But we’re certainly glad to be down here.
Lauren Cohen 1:29
Yes, Elliot. So tell us a little bit about your background, it’s so unique. And you know, you’ve
brought so much value to my clients. Thousands of clients actually, just tell us a little bit about
what makes you so unique.
Elliot Milek 1:42
Yes, well, thank you for that. Yeah, so I’ve been doing cross border taxes for almost 15 years
now. I was born and raised in Ottawa and I went to Carleton University. I always had a
background in finance and accounting. After I graduated from Carleton University, 13 years ago
or so, I worked at Ernst and Young for about eight years in their U.S. Tax Department. So I
worked with a lot of Canadian businesses, as they were sold to the U.S. A lot of U.S. citizens
who reside here in Canada. I mean, I worked a lot of cross border travel, and obviously a lot of
Canadians that are buying US real property as well. So after about eight years there, I took a
manager position at Deloitte doing similar work in the U.S. tax department, so I’m well versed in
that. And then I actually spent a couple of years in industry as well, working for a construction
company in Ottawa that did a lot of work in the United States, essentially building water slides
for, you know, a lot of amusement parks and stuff like that. So they have had a lot of US projects
that needed to be taken care of. So I worked there for a couple of years before kind of
branching out on my own, and started my own company about four years ago. We’ve been
doing very well, our area of focus, our businesses area of focus is working with Canadians that
buy U.S. real estate. But we also have secondary components. We work with Canadian
companies that send their employees to the U.S., that sell to the U.S., and work to help with
their sales tax implications. So we do a lot, and my area of focus is on cross border tax. Close to
90% of our work is more US based, but we do handle the Canadian side for our clients as well.
We’ve been working in business for about four years. And we’ve sort of recently transitioned the
business model to South Florida after getting our visa. We’ve been growing pretty significantly.
To be honest, we expanded our employee base, we’re currently up to about five employees
now. And we’re doing very well, and we’re looking to continue the success.
Lauren Cohen 3:32
Well, you know, if I have anything to say about it, the success will continue because Elliott has
become my number one cross border tax advisor. And basically nobody goes through my
process without talking to Elliott. Good, bad or otherwise, they have to talk to him. Whatever the
advice might be, they might not want to hear it, but he’s going to tell it like it is. Sometimes it’s
tough love, because you’re not always going to be painting a pretty pink picture. Because we
don’t want to see things with rose colored glasses, especially when it comes to the IRS and the
CRA, and all of the regulations and requirements and restrictions and implications of doing
business across borders. Because as I say, doing business in your home country is tough
enough, but as soon as you cross borders, it becomes that much more complex. We need
people like Elliot and of course myself and our teams on site to get the things done that are
essential so that you are protected. And generally speaking, Elliott is my first stop gap. For
every one of my clients. They come in, they do an onboarding call with me and they go to Elliot –
sometimes even before the onboarding call – because they want to have an idea of how things
are going to implicate them in terms of their Canadian tax situation. So Elliott comes in and
saves the day, quite literally. And I’m very grateful to you for that and you know, very grateful for
the nice relationship that we’ve built together. And now we’re local and of course it is a big deal
being away from Ottawa for the first time. You’re not having to deal with the winter, and yet
there’s a big adjustment and Elliott’s a perfect example. You know, I went through it 20 years
ago before I had a kid. And Elliot has two young children, and his biggest drive each day, right
now, is driving them to school. Elliot and his lovely wife take turns with the carpooling. They just
moved into their new home and it’s got a pool, and the kids are just so happy because there’s
water instead of snow. I’m sure they’re gonna miss the snow a little bit, especially Christmas
time. That does happen.
Elliot Milek 5:28
Absolutely. For sure. I mean, they’ve been asking already, to be honest. when the snow is
coming. The four year old anyways, and we say, “Yeah, you’re probably not gonna get much of it
down here. You might see it on TV here and there, and I’m sure your grandparents will send
pictures.” We’re going to be spending Christmas day on the beach this year, so to me it’s
exciting.
Lauren Cohen 5:50
There’s actually some snow events here, where they pump snow. So I’ll keep you posted about
those. I’m sure your kids will be happy. It’s fake snow, but sometimes you can even skate
around. His kids are playing hockey, at least the older one. So keeping in the spirit of the
Canadian hockey focus.
Elliot Milek 6:10
We are. Yeah, I mean, we’re trying to keep a little bit of roots. I mean, obviously, it’s not as
predominant down here, than it is back home where you have a rink on every street corner,
essentially. We have found a couple of nice ones, you know, within a 15 to 30 minute drive of us
and the kids are in both hockey and skating lessons, and we do that every weekend. So you
know, at least it gives us exercise, and it gives them a skill that they’re probably not gonna get
anywhere else.
Lauren Cohen 6:36
Yeah, definitely not a skill my son has. Neither does his mom for that matter. I grew up in
Canada, and I had to learn to skate, but I never really mastered it. But Elliot, really, what is the
number one biggest challenge that you see Canadians facing when they’re starting to invest?
Obviously, we’ve talked about this before, but just, you know, off the cuff, what do you think is
the biggest challenge that they face or the biggest obstacle that they need to overcome?
Elliot Milek 7:05
So I think the biggest obstacle with Canadians buying U.S. real estate in particular, is building a
proper team in place. So there are, like you said, there are a lot of intricacies when it comes to,
you know, all the legal aspects, the tax aspect, you know, property management down there. So
you may have a good base for a lot of these individuals who buy it in Ontario properties, and
they understand the rules of respect in Ontario, but it is a bit of a different animal on the US
side. So you know, especially these days, we can’t travel as frequently as we would like. So we
really need to have somebody locally that can actually, you know, hold your hand and make
sure your properties are well taken care of. That’s where your property managers come in place,
you know, making sure the structure is proper. So make sure you have somebody on the tax
and legal side that understands both the Canadian, and U.S. implications, and not only respects
the property, but also respects your individual situation. One of the first questions I always ask
an individual is, what is your yearly income? So, I mean, people get a little taken back by it
because what does this have to do with anything?
Lauren Cohen 8:07
I’ve seen it a few times with, they’re like, why does that matter?
Elliot Milek 8:11
But I mean, you know, your marginal income tax bracket is going to impact how we structure
you. If you’re in Canada, Ontario, if you make over $200,000 a year, any additional income
through those investments is gonna be taxed at 53%, here in Canada. So it’s not the most ideal
structure for you if we structured it that way. But if you make $50,000, all of a sudden, any
additional income is taxed at 20-25%, or, maybe 30%, at most. So there’s a 20% tax differential
between the two situations. So, you know, in Canada, our tax thresholds are simply less than
they are in the U.S. You know, in Canada, you’re in the highest tax bracket over 200k. In the
United States, you’re the highest tax bracket over 600k USD. So, you know, these are not trivial
amounts. So certainly, you know, every 5,10, 20% tax savings you can get, it’s going to be
dependent on your personal situation, where the money is going to be coming from. A lot of my
clients have operating companies in Canada and they need to take the money out of that
business to put it somewhere else first, because if you take it personally, then you pay personal
tax on that income. So again, every situation is different. After I ask about their yearly income,
the next question is, “where’s the money coming from?” Are you gonna be making these
investments from your personal line, to a trust, through a corporation? So these are the types of
questions that need to be answered before I kind of put a proper structure in place for you. Both
from a tax and legal side of things.
Lauren Cohen 9:32
Right. And it’s interesting because I had a comment on Facebook yesterday when we were
talking about the importance of putting your proper team and getting the proper guidance before
you set up your structure so you’re not paying all your money to the tax guy. And this person
was actually a British person, and they said, Well, why? What differences does it make? We’re
going to pay the money to somebody, what’s the difference? If I pay it to the tax guy or to the
team, they’re super expensive. My answer was that you’re going to pay the team once but
you’re going to pay the tax guy, or the tax agency, every year. And on top of that you will pay a
lot more in taxes. For example, let’s say you earn 100,000, in net proceeds from your real estate
investing, that ROI suddenly becomes 5000, because you’re giving it all to the CRA because
since you didn’t set up your structure properly your income is being taxed at your highest tax
bracket of 53%. So it’s a big deal. I get asked the question frequently ”What structure should I
have?” and it’s true, there’s a tax structure and a legal structure. Now, they don’t always
intersect, and what we try to do is create a plan that allows them to not only intersect, but also to
help you to achieve your goals. Sometimes this means a limited partnership, sometimes you
don’t need that limited partnership. Sometimes it’s multiple, limited partnerships. The main thing
that it’s important to remember that it’s not one size fits all, and anybody that says it is doesn’t
get it. The first thing I say is, whenever I’m interviewed or going on camera, I’m not providing
legal advice, and I’m also not a tax expert, I have a tax expert on my team, once you start
working with us, we will bring Elliot in. And he’s going to tell you the answers, because at the
end of the day, you know what I know about taxes, enough to get in trouble, and to make sure
that I pay them each year. And that’s it. And that’s enough. Because we want to be experts in
what we’re experts in. You’re not an expert in immigration, or E-2s, you’re an expert in what it
takes to set up your structure from a tax perspective for investing across borders.
Elliot Milek 11:45
Exactly. And that all comes down to who you bring on your team. That’s going to be key, and
making sure that each team member understands your full situation. I mean, I have a client in
Toronto who left briefly and went to an IRS agent, and, you know, he decided to set up an LLC.
And I was speaking to the IRS agent that they hired and we’re talking about their reasoning for
setting up the LLC and I asked him specifically, “How much cross border taxes do you do? How
many Canadian citizen clients do you have?” “Well”, he says, “None, but what does that
matter?” Well, it matters because you need to understand both sides of the border, because
that’s what matters. So you need to make sure that everyone on your team understands your
full situation, and not bits and pieces of your situation.
Lauren Cohen 12:31
1,000%. And that’s why we offer this holistic approach. And the other part of that is, and this is a
big deal, because Elliott touched on something that’s really important. A lot of my colleagues
and clients have invested with large coaching programs or investment programs, real estate
investing programs in the US. And they definitely do their roadshows or used to and will again,
through Canada, and they definitely attract clients. But the problem is that they don’t look at both
sides. And it often happens with some of the bigger outfits even, as well as small. You know,
here’s your investment portfolio, here’s your profile, here’s your structure, set it up, but they don’t
care what happens to you in your home country. And the other thing that’s important, as Elliott
was saying about the big picture and your goals is, you know, you may not think that you want a
visa today. But you want to be set up for success if that becomes a part of your strategy
tomorrow, because you can change your mind. And look, none of us expected a global
pandemic two years ago, but we got one. And so a lot of people that come to us these days
never really planned to leave Canada, but suddenly, it’s on their radar in a big way. They want to
leave for various reasons. Lock down, taxes, cold, which is, you know, an ongoing problem, and
all of those things, but suddenly the appeal changes, and because of that, we like to set up a
structure that has flexibility so that you can adjust your plan and that your plan adjusts with your
changes.
Elliot Milek 14:07
You said it perfectly, and you talk about flexibility. And that’s the important aspect for today’s
investor because you really don’t need to invest in your home city, home country, you really can
invest globally. And you know, on a visa and the proper structure and the proper citizenship, you
know, that can provide options to you in the event that something in your home country does
happen, right? I mean, I was in Ontario and things got locked down and we were fortunate
enough that we were able to cross the border and go to Florida on an E2 visa because we had
that flexibility. And you know, down here everything is open. Our kids are in a nice school, they
don’t have to wear masks at school, they’re enjoying their lives. They enjoy their pool all year
round, and we go to restaurants every weekend. You know, go to movie theaters, stuff like that.
It provides options and flexibility as you said. It doesn’t mean we don’t go back to visit. You know
without a visa we wouldn’t have that option essentially. So yes, there’s a cost associated with
that. But there’s costs associated with freedom in today’s societies in particular. So, you know,
that’s one fortunate thing that we were able to provide for my family. And that’s why we’re down
here and probably down here for at least a few years, and possibly more if things go really
awesome.
Lauren Cohen 15:17
Right, exactly. And that’s really important as well, is that, what we are both providing is flexibility
and options. Whenever I’m hosting a webinar, we talk about flexibility and options. Now people
are like, Well, what about financing? I would like to quickly mention my strategic partner Lendai,
the sponsor of my podcast. Lendai funds non owner occupied investment properties for
Canadians, Brits, Australians and Israelis investing in the US, their rates are great, and it’s not
based on income. So you don’t have to go through the fun process of getting financing as a
“foreign national”. It’s definitely challenging even with a visa, but we have certain financing
partners, especially Lendai that give you just a five minute quick answer and you’re done. And
you know, it’s all about all the steps. You can’t do one step. I just created a download, 10 Steps
to Successful US Real Estate Investing. And it’s the steps that you need, from getting your
entity, from speaking to us, to getting your entities, to getting your tax ID, to getting your bank
account, to starting to invest. And you don’t want to go to Step 10 until you do steps 1-9. And
too many people do that. And like you said, this IRS agent, or the internet, is just as guilty.
Because people go online, and they’re like, Oh, I’ll set up an LLC, oh, I didn’t have to pay that
lawyer all that money. But guess what, you’re gonna pay the CRA all that money.
Elliot Milek 16:57
And then some. And it really just comes down to your team, right? I mean, you have 10 steps
that you need to go through in order to get a visa, to get your tax structure in place, and to make
the proper investments, that make sense for both you and your wife and your family situation.
So if you have two people like us that understand the entire situation, and have gone through it
numerous times. And it’s certainly you know, it’s better than having one person do one sort of
thing, another individual doing another aspect of the work. But the other two people actually
understand the whole process. As a Canadian in particular, you’re probably 99% better off than
most people out there.
Lauren Cohen 17:33
You have to be invested. Not just financially, but you have to be invested emotionally. And you
really have to be invested, especially with children, because you are uprooting these kids, no
matter what their age. You know, Elliot’s kids are young enough that it doesn’t impact them quite
as much as you know, my kid who had to move to Israel, and he’s like, I don’t want to move. I
don’t want to leave my friends. I’m like, Yeah, but you’ll be fine. Well, I don’t speak fluent
Hebrew. But you know, the reality is, that there is no perfect time, just like there’s no perfect time
to invest. There’s no perfect time to move. It has to be the perfect time for you. And the perfect
time for you is when you decide. So when you make that decision, and you’re ready to make
those moves and invest across borders, and build your team, and create those structures and
potentially have the opportunity to live, work, and play in the US, as well as invest. That’s when
we’re here to support you. Elliott, how do people reach you, obviously through me every single
day, but how do people reach you directly?
Elliot Milek 18:32
Absolutely. So the best way is probably through my website, which is www.can-ustax.com, you
can reach me by phone as well, at 613-581-2695. That’s my Canadian number, certainly works
here in the US as well. Lauren can give you my email address, it can be a little lengthy, but
those are probably two best avenues to reach me.
Lauren Cohen 18:53
Yeah, I know how to reach him. So thank you so much for joining us today. This was a long time
coming. We had recorded this once, and it somehow got lost. So I’m very grateful that Elliot and
I had the chance to do this. I wish everybody, although this will air after Thanksgiving, I hope
everybody had a wonderful Thanksgiving. I wish you a wonderful holiday season wherever you
are. And if you’re in Canada, I’m actually going to be doing a live session on January 12th. The
place will be determined, but I’m going to be doing a live q&a session and we’ll have probably
Elliot available by some type of virtual call in, because everybody’s got questions for him. So
thank you again for joining us today. And thank you to Lendai, our amazing sponsor, and please
subscribe to our podcast, Investing Across Borders. It’s on all of the major Podcast channels
and please give us a five star rating. We really appreciate you, our subscribers, and thank you
again. Take care, have a great day everybody. Bye for now.
Intro/Outro 20:13
Thanks for listening to investing across borders with Lauren Cohen. Make sure to check the
show notes for any links and for guest contact information. If you have questions for Lauren
please reach out to her at founder@ecouncilglobal.com. If you enjoy today’s episode, please
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