Rental Property in Arizona requires Rental 1040NR and 140PY or 140NR to be filed - Form 211 reward claim


My wife and I are Canadian citizens and own a rental property (house) in Arizona. 
Do I need to file income tax in the USA? Can we deduct the mortgage interest
and any expenses associated with the rental on our Canadian income tax return?
Thanks and regards,
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david ingram replies

If you do not file a US 1040NR with Schedule E and Arizona 140PY or 140NR return, you face the likely Federal penalties of a $1,000 to $10,000 fine each per year for failure to report rental income as a non-resident plus 30% of the gross rent with no expenses allowed. 

That is for each of you if you both own the property.  And, I  have never seen a $10,000 penalty.

Then, you will EACH be assesed 30% of the gross rent with no expenses allowed.

(Canada's penalty of  just 25% of the gross rent with no expenses in reverse seems mild in comparison.)

FILE the US returns for every year you have missed.

THEN - There is NO responsibility for you to claim any rental expenses on your Canadian return.  You can claim them if you wish on form T776.  HOWEVER, you MUST report the gross rent on line 126 of your T1 if you do not claim expenses and the net rent if you do,.If there is a legitimate rental loss which has not been created by your using the unit personally, you can use the loss to reduce your other taxable income.

A Warning.  There is ample evidence that the IRS and CRA are pro-actively sharing information about these.  And, if you are in a complex and using the unit personally NEVER talk about the fact you have not filed a US tax return and don't ask a local.  I personally know of two people who make their living turning in Canadians who are not filing their US returns.  There is a 10% to 30% reward for turning you in by filing US form 211. See it at www.irs.gov - click on forms, etc.

If you need help with this, you now know where we are.
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david ingram wrote: --------------------------------------------------------------------------------------------------------------- David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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www.centa.com www.david-ingram.com   Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."

  Be ALERT,  the world needs more "lerts"   David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.   Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.   This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.   $800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.   $1,000 would be the same with one rental   $1,200 would be the same with one business no rental   $1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.   $1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out
$1,600 would be for two people with income from two countries


$2,800 would be all of the above and you moved in and out of the country.   This is just a guideline for US / Canadian returns   We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.   With a Rental for $350   A Business for $350 - Rental and business likely $450

And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.   Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.   TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.   8891 forms are generally $50.00 to $100.00 each.   18 RRSPs would be $900.00 - (maybe amalgamate a couple)   Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.   Just a guideline not etched in stone. 


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