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Name: RXXXXX
the_email: XXXXXXXX@yahoo.com My question is: Canadian-specific QUESTION: I am purchasing my first incomming producing property, and my question is what type of business should I set up and register for it. I am assuming a sole proprietorship is the correct form. I am also using 5K off a personal line of credit with the offer (I am getting 100% financing). Is the interest on this deductible and how do I go about doing this. --------------------------------------------------------------------------- david ingram replies
Compared to the two brothers in the previous question, this
one is a snap.
You should buy as a proprietor and be sure that you have an
adequate public liability policy to protect you from liability in case of slip
and fall, fire or other kinds of libility a property owner can find themselves
liable for .
As the managing director of a limited liability company, you
are just as liable as a proprietor and the tax rates are not as favourable.
When it come to deducting the down payment loan, the T776
rental schedule has a place for mortgage interest. Just add the down
payment loan interest to the actual mortgage interest and it will be deducted
on the form.
I do not know if the mortgage on your home is deductible
already, but if it is not, you can use your renmtal property to make your own
mortgage deductible as well.
Log on to www.centa.com
and click on newsletters. You want to read the November 2001 newsletter.
Note that the first page deals with "when Canadians have to file US tax returns
(not necessarily pay tax but "have to" file a tax return to prove it).
The next 11 pages show you haw to make your Canadian personal house mortgage
interest deductible, using self-employed income, mutual fund income, or rental
income. We sometimes recommend the purchase of rental property for the
purposes of making your mortgage interest deductible while making a profit on
teh real estate.
Hoping this helps, I remain
David Ingram -
www.centa.com
the CEN-TA Group
Real Estate taxation Specialists
US / Canada / Mexico Income Tax and Working Visa Matters 108-100 Park Royal South West Vancouver, BC, CANADA V7T 1A2
(604) 913-9133 Fax (604) 913-9123
Cell (604) 657-8451 10 AM to 10 PM 7 days a week |
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