owns several small apartment buildings -

Hi David,

I had a phone appointment with you in June regarding an apartment building I was purchasing in xxxxxx, xxxxxxx. The call was short, about 20 minutes, and you told me I could contact you again if I had any further questions. I don’t expect you remember me, but we also spoke at some length about autism (I have a young autistic son) and you suggested a therapy by a friend of yours in Vancouver which I am looking into.

My questions relate to the apartment building:

1)       I purchased it in xxxxxx (8 units) and am wondering how I claim the appraisal fee, the building inspection fee and the lawyers fee on my tax return.  

2)       How do I calculate CCA and is it beneficial to claim CCA each year?

3)       How is CCA treated when I sell the building?

I am just about to close on another building in xxxxxxx (4 units) in 2 days. This brings me to a total of 12 units. I am looking to buy 2 more buildings bringing the total to 18 – 20 units, in 4 separate buildings. The rental income covers all mortgages and expenses, and also produces an income for me each month, presently $500 increasing to $1000 with the purchase of the additional buildings.

I do not want to become a corporation or a business. I am concerned that CCRA will insist I am a corporation or a business because I will have up to 20 units in 4 separate buildings. How do you see my situation?

            The income I make each month from the buildings is added to my support payments and helps with our living expenses.

      Your advice is appreciated. If you want more details I can call you or email. Thank you.

         

       Sincerely,

        

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david ingram replies:

1.  The appraisal, legal, trips to xxxxxxxxxxxx to buy and building inspection fees are NOT deductible on your return.  They are all added to the cost of the building and may be depreciated over the years at 4% per year on the diminishing balance.
    In the first year, the figure is 2%. 

2.    Partially answered in '1' above.  In addition, the depreciation figure which is called Capital Cost Allowance on the return can not beused to create a rental loss.  Thereofe, if there was an amount of $6,000 to use as depreciation and your profit was only $3,217.55, you could  only claim depreciation of $3,217.55. You should go to a CRA office and get hold of the renter's guide.  It has the T776 form and the method of claiming CCA.

3.   When you sell the building, the CCA is added back into the rental schedule and you have to pay tax on it at that time.  When you sell, it is important to keep enough out to pay the tax if you are using the money to buy another building. 

The CRA will NEVER call or deem you to be a corporation if you have not physivcally incorporated.  In general, I do not think anyone in your position should be incorporated.

I am happy that the school is helping your son.  An autistic child is a total life situation.  I took someone down to Paul Swingle's yesterday.  A suicidal woman who walked in crying and weeping and walked out laughing with her sound health device and detailed instructions which did not involve any drugs.  While there, the Koreamn lady whe was attacked and left in a coma in Stanley Park was wheeled out.  She ws laughing and apparently is now painting, etc.

This was the lady who was considered to be a living vegetable.

You can see that story including the Swingle treatment at:

http://thetyee.ca/News/2005/05/26/JiWonsProgress/


david ingram
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David Ingram wrote:
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It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when i am out of town. 

However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. As an example, as I write this on June 28th, since June 16th (12 days), my 'spammed out' box has 7,118 unread messages, my deleted box has 2630 I have actually looked at and deleted and I have answerd 63 email questions I have answered for clients and strangers.  I have also put aside 446 messages that I am maybe going to try and answer because they look interesting.

Therefore, if an email is not answered in 24 to 36 hours, it is lost in space.  You can try and resend it but if important, you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321

David Ingram's US / Canada Services
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My Home office is at:
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Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office)
 
 
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."
 
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 is to be returned to 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. 
 
This from "ask an income trusts tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention

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