Non-citizen, non-resident owning real estate

[ryan666]

I am a citizen of Canada and resident of Japan, currently paying only Japanese taxes. I am considering the purchase of some condos in Phoenix for the purpose of rental income.

I currently do not own any US real estate. Before buying, I am trying to figure out the tax implications.

My understanding of the Canada-US tax treaty:
I can choose between the 30% withholding rate on gross rental income or filing a US tax return and paying income tax on the net income.
Does that sound correct?

My understanding of the Japan-US tax treaty:
I can choose between the 10% withholding rate on gross rental income or filing a US tax return and paying income tax on the net income.
Does that sound correct?

Am I able to just choose which treaty I want to base my taxes on? Clearly I would like to pay as little tax as possible, but is there anything else I should consider in making my choice?

[Jeff4cpa]

It is likely that the tax deductions will cause your taxable real estate income to be a loss, even though the real estate has positive cash flow. Therefore, you should just file a U.S. return and pay no taxes.