My_question_is: Canadian-specific Subject: rental property and capital gains and income spliting Expert: taxman at centa.com Date: Sunday October 29, 2006 Time: 11:51 PM -0500 QUESTION: how often must i do my taxes. can i split the income frome rental property? -------------------------------------- david ingram replies: I am not sure if this is a serious question. However, 1. The CRA requires an individual to file their Canadian T1 return by April 30th of the next year. Therefore your 2006 return is due by April 30, 2007. An exception would be if you were self-employed and bill others for your services and when you are paid, the payer does not deduct CPP or EI from the money paid to you. If you OR YOUR SPOUSE is self employed, your return is not due until June 15, 2007. A further exception does not apply to you. However, non-residents of Canada with rental property have until June 30, 2007 to file their 2006 rental tax return under Section 216(4) of the Income Tax Act. If you are married or in a common-law situation, you can NOT split your income on your tax return with your spouse if they did not put an equivalent amount of money into the deal. This is covered by section 74.1 of the Income Tax Act. You may give your partner 30%, 50% or 100% of the profit but it is still taxable to you if they did not put money into the deal. Section 75.1 covers capital gains. Again, you can not split it if they did not put money into the deal. However, with planning, one can move the income to the spouse by having the spouse use their share of the money they receive to buy some of the property from you. In other words: 1. You buy the property totally in your spouse's name with your money. At that point 100% of the profit is taxable to you even though under common law, your spouse "owns" the property and the income. 2. You pay the tax on the profit but your spouse gives you the money and pays you for "x" percentage of the property. Let's pretend that they made enough to actually pay you for 2% of the value of the property. 3. Next year, you pay tax on 98% of the profit and your spouse pays tax on 2%. Over a series of years, it is possible to switch any percentage you desire into their name for tax purposes. --------------------------------------- David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://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 <http://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 Saudi Arabia to Mexico to China or Chile - Cross border, dual citizen - out of country investments are all handled with competence & authority.
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