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The following client has properties in
California and Hawaii and is just in the process of buying a rental property in
Whistler. All of his other properties are in a US living trust for estate
purposes but the TD/Canada Trust would not finance a US Living Trust in Canada.
I did receive confirmation that the CIBC (call Joan Marsh at 604-535-9981)
would accept a Living trust as the owner of the property.
Dear David, I am hearing a lot about the
value of currency and exchange
rates, especially in regards to the USED and CAD. IF I were convinced that the CAD was going to increase in value in the next years, and that the USD was going to lose some overall value in relation to the CAD, would you recommend that I leave my Canadian rental income (in CAD) in my Canadian bank, in Canadian investments, or such, as opposed to sending it to my US bank and changing it to USD as the rent comes in? Do you think that I should keep my Canadian rental income separate from my US rental income so as to make Canadian financing, banking and taxation easier and maybe try to deduct some expenses from my Canadian tax? When is the separation of my Canadian rental from my US rental income important, if at all? Thank you very much! RXXXX XXXXXXX -------------------------
david ingram replies:
I think that the Canadian loonie will do fine against the US
greenback in the short and long term. I see a 70 cent
loonie in the next few months. However, a sure way to lose an
extra one or two percent is to get involved with changing your Canadian money
to US money and then back to Canadian Currency.
Send up your first down payment and then try and keep the
Canadian Accounts separate from what you are doing in the USA. My
understanding now is that you are going to buy the property in your own name.
You will be filing a Canadian tax return under section 216(4)
of the Canadian
Income Tax Act and we will convert the figures to US dollars
and you will file a schedule E with your US 1040. If you have paid any
income tax to Canada, you will then claim the Canadian tax as a credit on your
US return by filing a form 1116 and possibly a form 1116 AMT.
Your tax life will be very much
simpler if you keep the properties separate.
Remember that because you have had over $10,000 US in a foreign account (even
if the $90,000 down payment is only there for just a "few" minutes), you also
have to file a TDF-90 to report your foreign (Canadian) bank account(s).
US/CANADA Real Estate Income Tax 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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