Subject: (no subject)
HI I DONT KNOW IF
YOU CAN HELP BUT I THINK SO .A FRIEND OF MINE BOUGHT A CAR AND PUT DOWN A
1000 DOLLARS BUT THE CONTRACT SAID1750.THE DEALERSHIP SAID ORALLY THEY
WOULD GIVE HER TIME TO PAY THE REST.WELL 24 DAYS LATER THEY CAME AND
REPOSSES THE CARBECAUSE THEY WANTED THE REST OF THE MONEY.THEN WHEN SHE
OFFERED THEM THE MONEY THEY REFUSED KEEPING THE CAR AND HER MONEY.WHAT
RIGHTS DO WE HAVE.SHE WASNT EVEN GIVEN 30 DAYS TO MAKE A PAYMENT AND WHEN
SHE TRIED TO GIVE THEM THE REST OF THE MONEY ACCORDING TO THE CONTRACT
THEY REFUSED.HELP OR CAN YOU.
-----------------------------------------
david ingram replies weakly!
The problem with this is that an any oral
agreement on a used car is only worth the paper it is written on.And, every jurisdiction (state and / or
province) has different sets of rules.From your description, she does not have
a leg to stand on (or a car to drive).The only advice I can give is to go to
your local Better Business Bureau and complain.;They all have arbitration panels and if
your lady friend goes in with the money and says she offered to pay "right
now", she just might win in the publicity war.However, the costs could be very high.I would make the suggestion that she is
better off taking the $750 she has and finding another car and making a
better deal.The dealer who seized the car likely has
another $750 worth of Bailiff and other fees against this now and she
would need $1,500 to "catch up. David Ingram
Any comments from anyone? Past
experience - comments about this reader's new business venture.
Suggestions for a good Mexican / Canadian / US Insurance agent.
-------------------------
Hi Davie....??????
here.
I was going to e-mail you
tomorrow, but no time like now time. Dave I am starting a tour business to
Baja...Its somewhat unique.I will take couples on a tour of Baja in my
motorhome. I plan to start up next winter.What state is
the best to get a business license and register...I assume a state with no
tax....What do you think?.......I trust your keeping well,regards to
George Hatton and Jose and all in the office. cheers, ??????
----------------------------
david ingram replies:
<personal
snip> Sounds like a great
business. Being a retired dual US and Canadian
citizen leaves you in a great
position to work out of the US in the winter and Vancouver Island in the
summer.
However, your problem will not be with the
United States. To do what you want to do, you need a "great" insurance
policy which you will need to cover a BC registered motorhome to transport
paying passengers into Mexico from California or Arizona. That
might be hard to get at any price which will let you make a profit.
You will also need an FM2 or an FM3 Mexican working visa. If
the idea is that you are going to be "in Mexico" already and they will
join you, you absolutely need an FM3 visa. Where are you now?
I had Amazon.com send you a couple of book suggestions that you might want
to pick up if you are going to "Mexico".
Interestingly, when I was reading your
email, a California client of Mexican descent whose brother used to work
in the WHITE HOUSE and now works with the Tijuana Tourist Bureau came in
the office. "HE" owns a rental condo in Whistler and we are doing his
non-resident tax return. He is going to put me in touch with
his brother and I will see if there is anything else. I am
also passing this on to Salvador Huerta, a Mexican/Canadian CPA
who I am trying to put some "paid for" Mexican work together "with".
You might be the first real client for the new venture. BUT
FIRST - go to a Good Mexican/American Insurance Agent. NO Insurance - do
NOT do it. Make sure you can afford the insurance before I
start running up a big bill.
-------------------------
Dave, you are a gem. How did
you know my routine, but I guess you know me by now. Insurance I will get.
My base will be Yuma Arizona.
That's where I am now and just
tripping in and out of Baja. Baja is becoming a big sell with Europeans,
especially it seems with the Germans.
My trips will be 10days at $300 US a
day, all the comforts of home. However I am flexible like I've always
been. I just talked to
Yuma City hall and because I am outside the city limits I do not need a
business license. Having a Mexican national on board (so to speak) would
be a great advantage. All Safaris in the process of getting registered
will start out of Yuma though Baja and terminate in Yuma. Clients would
fly to Phoenix then on down to Yuma.
From Asia they would fly to LA then
to Yuma. Can I get
them to sign a waver in case of whatever?
I plan on starting up in November
this year. cheers, XXXX
------------------------
david ingram replies:
You can get them to sign a
waiver, but it is not necessarily effective.
Remember that airline
passengers sign waivers and regularly sue the airlines, the pilots, the
ground crew and the driver of the snowplow.
The only thing that will
protect you is a Major Insurance Policy. this means TWO MAJOR
INSURANCE policies because you are going to be carrying passengers in the
US in a Canadian Motorhome AND you are going to have paying passengers in
Mexico.
You need to tell ICBC what you
are doing to be covered for your public liability under ICBC.
You need some sort of policy
for Arizona because you are acting as a livery vehicle picking people up
in Arizona and should likely put an Arizona Licence plate on as well.
You may be taking people into
California as well and likely need a livery licence or tag to operate
there.
Remember that you are going
across international borders where your situation will come to the
attention of the authorities.
Miss one "little" item and you
can be dead in the water financially. You also have to be
absolutely sure about the passengers.
All you need is a German
passenger with a joint and you will lose your motor home and could end up
in a Mexican hotel with bars for 20 years.
Mike from Singapore points out that I left
Singapore out of the list of commonwealth countries whose citizens still
qualify for a border issued waiver if they are landed immigrants in
Canada.
Dave
I think you have missed
Singapore off the waiver list.MXXXXX
[Subject: RE: [CEN-TAPEDE] CANADIAN
LANDED IMMIGRANTS REQUIRE VISA FROM CONSULATE AFTER MARCH 17, 2003
You are right -
Singapore is in the Commonwealth countries and shows up in the Chart
near the bottom but I did not put it in the list.
Thanks
ingram
Name: PXXXXX
My question is: Canadian-specific (but applies
to almost every other country - just the form name and line numbers
would be different on the individual country's tax return.)
QUESTION: RE: Taxes on Internet Domain Names
I have registered over 100 internet domain names. This year I
have
experienced some losses. Are they considered to be capital
losses
(Schedule 3, line 127) or are they
considered to be business investment losses (line 228, line 217)?
What will CCRA consider internet domain name losses to be - capital
losses -
(Schedule 3) or business investment losses?
Do I have the choice on which type of loss I can claim it as?
Also, while I
experienced losses this year, I may have gains in future years if I
can sell
my remaining domain names at a profit.
Thanks for reading this question and for your help David!
=============================================
david ingram replies:
Neither of your choices is the answer.
There is no doubt that you are in the "business" of
buying, creating and selling
DOMAIN names. As such, any profits
are taxable at full rates and any losses become deductible as a full
dollar amount against any income.
In Canada fill out CCRA Form T2124 and enter
the resulting loss (or profit) on line 135 of the Canadian T1
General return. Filling out the T2124 will undoubtedly remind you of
other legitimate deductions which could involve depreciating your
computer, claiming part of your internet connection, research
materials, postage, photocopying, artwork, office in home, etc.
The same answer would apply to the US, New
Zealand, Great Britain, Germany, Spain, etc.
In the US fill out Schedule "C" and put it on your
1040.
As always, I would remind readers that the CEN-TA
Group provides this type of service.
George Hatton at (604)
913-9133 (Hatton@centa.com)
would be a good resource to help you with this type of return and its
filing. I mention this
because you considered a capital loss and an ABIL but omitted the
correct one from your choices.
For those of you in the Vancouver
/ Vancouver Island area, this is the kind of question I answer most
Saturdays on the FRED SNYDER Show on CFUN from 2 to 3 PM - CFUN is
1410 on the AM Dial - the call in number is:
*1419 from your cell phone, (604)
280-2386 locally and 1-888-280-2386 from the island or way out in the
Fraser Valley.
My question is: Canadian-specific (but
applies to the USA as well.)
QUESTION: My wife and I separated in Aug. 2002.
1. When claiming my marital change on the tax form, my refund is
increased. Is this because I am now separated?
2. Do I claim the amount being paid for child support and does she
claim it as income?
Thanks for your assistance.
With everything else the same and an income of over
$18,000, your refund should NOT get higher if you are separated. If
your income is under about $18,000, you might qualify for a BC sales
tax or other provincial credit which you do not qualify for with a
higher combined family income. Child support is not
deductible in Canada for any new agreements made after May, 1997. An
earlier child support agreement might still be deductible to the
payer and taxable to the recipient. Child support has never
been deductible in the United states. So, if your
agreement is for child support only, it does not form any part of
your tax return. On the other hand, if you were paying $1,000 a month
child support and $500. (or any other figure) of spousal support, the
spousal support would be deductible to yourself and taxable to the
recipient. If this applies to you, you need to fill out
CCRA Form T1158 which you can download and print from: http://www.ccra-adrc.gc.ca/E/pbg/tf/t1158/t1158-02e.pdf
In addition and in any case, you can also download and print the
CCRA's Support Payments Guide from:
http://www.ccra-adrc.gc.ca/E/pub/tg/p102/p102-02e.pdf
You need Acrobat reader to read these forms. You can get a free
copy of Acrobat reader if you look around at:
www.adobe.com D'Arcy
von Schleinitz at (604) 913-9133 (darcyv@centa.com)
would be a good resource for you if you need help doing your return.
----------------------------------------------------------------------------------
David Ingram -
QUESTION FROM SOUTH SURREY
We,my wife and I,are both employed by the
Government,making $60K each /year.
We Sold our home in
Jan/01.
We got 270k proceeds for another
downpayment on a future home. Real Estate,in the area(White
Rock) has since gone up 25%.We are currently renting a home
$1500/month.We have two children ages 11
& 17 years and wish to remain in the area.
We have little savings(RRSP) and I am 5
years from retirement at 60 y.
I would like to know if it is wise to
purchase a home with a rental suite. We would be living in one part
of the home.
We are looking at a mortgage of approx.
$300K . Can I make the interest payments deductable?
Should We get an open or closed
mortgage?
Thank you MXXXXXXXXX
-------------------------------
david ingram replies:
Being out of the Real
estate market for any length of
time is always a risk.
However, trying to catch up in the market we are in right now is
also a risk.I think that
we can expect our values to go down significantly in the short term
and you might be able to
get back in and catch up. But
that is an extremely dangerous position to take. Because,
if I am wrong and the place you want goes up another ten percent
(say $50,000), you need to make $150,000 to make it up because you
have to earn $150,000 and pay $50,000 of tax to have $100,000 left
to pay the $50,000 increase in price, plus the interest since it is
borrowed money.
This is a horrible further penalty
to pay because you believe my opinion. I am going against the
general trend which only sees an upswing in real estate in the lower
mainland.There is little risk if the price
goes down.If
you buy a $500,000 place and the price goes down and you intend to
keep it, the price fall is meaningless. You were not intending
to sell it and if you hold on long enough, the price will recover.
So, even though "I" think the market is going to fall, you should
still buy now.It sounds like you have $270,000.
I
have three suggestions I have seen succeed in the past and cannot
see any reason they will not succeed in the future.
1. If you found a real
$540,000 Duplex and paid for your half and borrowed the rest, all
the interest would be deductible (see Brian Wilson case).
2.. Another possibility
is to buy two townhouses, pay cash for yours and then put a mortgage
on it to use as a down payment and borrow 100 % to buy the rental
townhouse. In that case the interest would be deductible.
3. And yet a third
suggestion would be to buy "4" units while you continue to rent
until the kids leave home. Eight or nine years from now, move into
one and defer the tax under Section 45(3).
Other things to consider.
You do not have a lot of savings.
Have you been
with the government long enough to qualify for a decent pension?
Are you
being forced to retire at 60 or can you work to 65.
Can you take
retirement and continue to work as a consultant or work part
time until 65? the longer you can continue to put money into your
CPP, the larger the pension in the future.Just
some thoughts.
With regard to mortgage deducibility, you should go to
www.centa.com,
click on newsletters and read the
November 2001 version. It has 11 pages of information
about rearranging your affairs to make your mortgage deductible.You
would likely get a lot out of a private consultation. Give it
a thought. If you do decide to come, You and your spouse
should both come together.david ingram
Question for You
SXXXXXX
My question is: US-specific
QUESTION: I have an 11 acre horse farm and would like to pass it to
my 5 Children. The property is worth about $250,000. My cost basis
in the property is virtually zero (since I have depreciated it with
Horse breeding income). What is the best way to pass this property
to my children in order to minimize capital gain and gift tax
concerns. I am 70 years old.
---------------------------------------------------------------------------
david ingram replies:
The best advice today is not necessarily the best
advice tomorrow. However, there is
no estate tax on the amount you mention.
Why not just enjoy it and leave it to the kids when
you ride off into the sunset. They
will inherit it at your cost base and when they sell it, they will
have enough money to pay any capital; gains tax that may ensue.
You could start a gifting program now but that
just causes control problems most of the time. Five kids can
rarely get along when it comes to an estate.
See a local lawyer and make sure you have a will.
Another technique which could save fes in the future would be to put
the whole thing in a living trust or even crazier (but not that)
would be to put them on the title as joint tenants with you with a
side agreement that they are only on title for ease of probate and
that they do not consider themselves to have any claim on the value
until you die. That way, there is no gift tax but
it transfers very easily upon your demise.
You really have to consider the kids though.
1. Would one or two of them
really like to own and operate the place themselves? If so,
you need a will that leaves the whole thing to them and the power to
mortgage the property to pay the others their fair share.
You could have the other four carry a 25 year mortgage which comes
due in ten years. In ten years, the child that kept the ranch
should have enough equity that he or she can refinance and pay out
the siblings. I can think of a dozen different ways to
address this. I don't have the time to consider them all.
Find yourself a good family lawyer and discuss it
with them first by yourself. Then call in the kids for
another discussion with the lawyer. Do NOT make any decision.
Go back and talk it over again with the lawyer and see what their
opinion of a solution would be.
Hope this helps. By the way, if you
want to bring the family up for a vacation in Vancouver, BC, Canada,
we would be glad to help you out. We do a large
percentage of our work by email, snail mail, courier, and fax.
Distance is not a problem with
David Ingram -
Hello, David my name is DXXXXXX and I recently purchased some rental
properties and I was wondering if you knew any real-estate
accountants in Edmonton Alberta you can reach me at this
e-mail address your help would be greatly appreciated
I currently subscribe to your
centa email. I love the attitude and advice presented in the emails.
My wife and I are currently looking for an aggressive account to
work with us. However, we live in Edmonton, Alberta and would feel
more comfortable with someone in this city. Could you recommend
someone in Edmonton that shares your views on taxation?
------------------------------------- david ingram replies
I have a good friend who now lives in Las Vegas but still uses
his Edmonton Accountant for his Canadian Stuff. He "swears" by him
and in spite of a twenty year association, I have never managed to
get "Ralph's" business although we certainly trade opinions about
US/Canada stuff. Ralph's accountant is: drum
roll please!
Frank Phillet
Phillet & McLennan
#207, 10350-124 St
Edmonton, AB T5N 3V9
(780) 429-0460
Please note that Mr Phillet has no idea that this is going out.
If he wants to send me an email at
taxman@centa.com. I will be glad to tell him who gave his name
out but I will bet that the Las Vegas reference will suffice.
Good luck. I know how "Ralph" feels. the
backbone of our business is people who have moved away or who move
often and have sent us their work by mail or fax or courier or email
for years. Without them, we would be dead.
Thank
you for the information.I have one more question.If I write to the IRS to get an exemption from withholding
tax on the sale of my property and it takes them 90 to 120 days to
respond, does that mean I cant sign any documents for transfer of
ownership or obtain the funds for the sale until 3 to 4 months when
the IRS has replied?
Answer:
No - you can still
sell. Tell the Escrow agent you are expecting the letter. I
have seen Escrow agents wait four months for the letter before
finally sending the money to the IRS in disgust.You should
get the letter in time for the escrow agent to release the money to
you directly. REMEMBER - you still have to file the tax
returns next year even if there is no withholding.
david
---------------------------
Hi again David
If
I do not ask the IRS for an exemption from withholding tax for the
sale of our property in the
U.S.so
I could go ahead and sell the property immediately what will I
have to do?
Answer:
Get your ITINs Now -
You need them anyway.
Give them to the
escrow agent or at least make sure the Escrow Agent does not send
the money to the IRS until you give them the ITINs.
The wait for a year or
at least until next February and prepare a 1040NR each and An
Arizona 140 Tax return each to ask for the money back.
we can do those here
for you.
ingram
-----Original
Message----- Sent:Thursday,
March 06, 200311:19 PM To: CENTAPEDE Cc:
sonja@centa.com; D'Arcy von Schleinitz Subject:
[CEN-TAPEDE] Sale of Lot in Arizona- avoiding the
10% withholding
Hi David
My husband and I are Canadian
citizens and we bought an RV lot in Arizona
in 1999 for $23,413.50.
We are now selling the lot for
$25,900.
Property taxes totaled $778.70 and
caretaker/other costs totaled approx. $2786.00.
We had no gain on sale of the lot.
What should we do regarding the
U.S.
tax rules (with-holding tax requirement etc) and getting back any
money they with-hold from us?What forms are we required to complete?
Thank you very much for your help.
XXX XXXXXXX
Sherwood Park
,
Alberta
-----------------------------------------------
david ingram replies.
Withholding 10% is a federal law
which applies to the purchaser when the vendor is a non-resident
who does not have a clearance certificate from the US IRS.
the same thing happens in reverse
when the vendor is a US
resident and is selling something like a Whistler condominium.
In the case of the sale by the
US
resident,
Canada
requirtes the withholding of 25% of the gross sale unless a form
T2062 is submitted to the CCRA and a Canadian Clearance
certificate issued.
With the hundreds of forms in
the US
system, however, there is no IRS form similar to the Canadian
T2062.
To get an exemption from
withholding you have to write a letter to:
IRS
Office of International Operations
11601 Roosevelt Boulevard Philadelphia
,
Pennsylvania
, USA
19255
In the letter you should include
the originals of all your costs associated with the lot.
Note that travel expenses from Canada
are NOT going to be allowed as a deduction against a possible
capital gain. I have taken the following cost and sale
amounts from my August, 1994 newsletter. You can find the
whole newsletter at:
http://www.centa.com/0894.htm
I have pulled the list out and put
it here:
Calculating the Adjusted Cost base
of a piece of US Real Estate.
When calculating the profit or loss on the sale of a US
property, one must first determine the basis or adjusted cost
base of the property. The usual method is to take the purchase
price and add or subtract relevant amounts.
Examples of Increases to Basis (Additions to cost price):
*
Purchase price of the property plus any appropriate taxes PLUS:
* An addition to the property (new room, lift and put a basement
underneath).
* Replacing an entire roof.
* Paving a driveway, or building a driveway, or an approach
bridge or culvert.
* Installing central air conditioning.
* Legal fees and closing costs to purchase property.
* Survey costs, fencing, digging or drilling a well.
* Installing septic tank or alternative energy source.
* Rewiring building, replumbing entire building.
* Assessments for local improvements: water connections,
sidewalks, roads.
* Casualty Losses - restoring damaged property.
* Interest and taxes not used as a deduction in other years (US
only).
Examples of Decreases to Basis:
* Exclusion from income of subsidies for energy conservation
measures.
* Insurance reimbursements.
* Casualty or theft loss deductions.
* Easements (amount received for granting an easement).
* Credit for qualified electric vehicles, (amount of the credit).
* Gain from sale of old home on which tax was postponed (family
residence only).
* Residential Energy Credit: Amount of the credit if the cost of
the energy item was previously added to the basis.
* Section 179 Deduction.
* Deduction for clean-fuel vehicles and clean-fuel vehicle
refueling property.
* Depreciation: The greater of the depreciation deduction which
decreased your tax liability for any year or the deduction you
could have claimed under the depreciation method selected.
* Corporate distributions: Non-taxable amount.
Keep a photocopy of all the
receipts you send. And send the originals because they do not
want copies. They will send them back to you.
Ask for a waiver of the tax. It
will usually take about 90 to 120 days.
In your case, there is not likely
going to be any withholding. However for someone else's benefit,
it\f it ended up that there was still a $10,000 profit on a
$100,000 sale, the purchaser has to hold back 10% of the $10,000
and remit the $1,000 to the IRS on an 8288 form.
If the lot was in California
, there would be a state withholding of 3% and if the lot or
condo was in
Hawaii
, the withholding is 5% for the state.
Even if there is not withholding,
you still have to file a tax return each to report the sale.
Failure to file the tax return as a non-resident with US
source income is a minimum fine of $1,000 each to a maximum of
$10,000. I have seen a 105 year old woman fined $10,000.
It is just like a parking meter ticket.
You also need Individual Taxpayer
Identification Numbers to file the US tax returns and you should
have them BEFORE the saleso that the escrow agent can properly
identify the sale against your number and not get your sale mixed
up with the other 5,285 John smith's who file tax returns.
You get your ITIN by filling out a
form W7 and sending it to Bensalem.
Remember you both need an ITIN and
you both have to file a tax return. You can get the W7 here:
Remember that the sale has to be
reported on your Canadian Income tax return as well.
Last but not least, we are a firm
that specializes in the type of work you need. D'Arcy von
Schleinitz or Sonja Clark CA, CPA, LLB in the office below can
help you with ease.
