Hi David,
I plan on purchasing a Residential Short Term rental property in Florida in my
personal name.
What is the tax implications on the yearly revenue?US and Canada?
When I sell the property what are the tax implications on the equity?
Regards,
-------------------------------
david ingram replies:
Too busy to deal with this - these older questions will / should give
you what you need. There is no state income tax in Florida.
----------------
QUESTION: Buying real estate in the US.
Hi David,
I'm sure you're getting a lot of these inquiries lately!
If I were to purchase a property in the US, not to be rented out, what am I obligated to declare at tax time?
Do I have to declare in Canada and the US?
If I were to sell said property, I understand that the US gov't withholds approx 30% of any capital gains. Is that correct? Would I also have to declare this in Canada?
Many thanks,
--------------------------------
DAVID INGRAM REPLIES:
I am and here are a bunch of older answers that may help.
QUESTION:
IS IT BETTER TO BUY A HOUSE IN THE U.S. IN YOUR PERSONAL NAME OR A COMPANY NAME.
--------------------
david ingram replies:
I think you are 99 out of a 100 better off to buy in your own name. If
it is a rental - do NOT work on it yourself.
QUESTION:
What is the best way to either structure a company (Canadian or USA)or
set myself up personnel to shelter / minimize taxes paid as a Canadian
resident, working in BC, investing in real estate in San
Diego,California, USA?
-----------------------------------
david ingram replies:
There is no one best way because everyone is different in terms of
estate, family, immigration and other issues.
In general I do NOT recommend buying in the name of a company. If the
desire is to escape public liability, you do that with a good insurance
policy.
Directors can be held liable for many, if not 'most'
responsibilities of a limited company if the creditor or wronged person
wants to pursue it. Think of the driver of a car belonging to a limited
company. They sue the company AND the driver.
If you incorporate cross border, be prepared for an
extra $2,000 a year in accounting plus legal fees plus extra state
filing fees. California where you are thinking of investing, has a
minimum $800 a year government filing fee for an LLC as an example even
if you lost or lose money on the rental..
The following older Q & A may help.
QUESTION:
We just purchased property in Spokane Washington( a 4 plex apartments)
We plan on renting out 3 of the units and keeping one. I was told by
the border crossing inspector,
that I have to hire a rental agency in order to rent out the apartments.
and I also have to have a property manger full time..
We will be at our apartment approx 2 times a month..
So we do not need a property manager.
Do you know if this true,, or please direct me to the correct person
that would be able to help me.
Thanks for your time.
----------------------------------------------------------
david ingram replies:
You need a property manager if you do not want the strong possibility
of going to jail for a few days before being deported and then not
allowed back in the USA. For a story about US Immigrations hell for a
Holiday Inn Manager, try
http://apostille.us/news/local_holiday_inn_express_manager_in_jail_on_immigration_charges;_husband_fights_for_her_return.shtml
or how about a married woman's ordeal in Georgia
for a traffic violation at
http://www.canada.com/ottawacitizen/news/story.html?id=f4f1d2fb-07ae-4560-8f6c-703acf8146fb&k=0
Crossing the border when you have an ad running to show the premises
and saying you are going down to spend the weekend in your holiday home
(i.e lying to the HOMELAND Security official) could result in seizure
of your vehicle and a ban for up to 10 years under their ER (Expedited
Removal) process. In other words, it is more serious to lie to the
guard at the border than it is to do the work.
You 'could' actually show the property for rent, but you can NOT write
out a contract for rent or collect a single rent cheque (check) or cash
for rent in the United States. There is nothing new about this. The
first time I ran into it was in 1972 or 1973.
If you are physically there, you can NOT cut the grass, shovel the
sidewalk, paint or decorate or repair or fix or remodel or improve or
take out the garbage for any part of the rental property.
You can paint and clean your own unit if it is NEVER rented or intended
to be rented. You can not paint and clean up getting the property ready
for rent so DO NOT make the mistake of thinking you can live in one,
clean it up and remodel it and then rent it out and do the same for
another one and then another one and another one. If you do this and
one of your tenants (who maybe doesn't like you because you evicted
them or told them to turn their stereo down when you happen to be in
town or for any other reason) read my website, (or the uscis website)
he or she would find out that you can NOT do this stuff and could phone
the Homeland Security office or write an anonymous letter and you could
be arrested in November 2008 for something you did in December 2007.
This may seem unreal, but in US terms, working without a visa is just
as serious in law as the spontaneous robbing of a convenience store and
the penalties can be worse. Think of those nightly news shows with 28
illegal Mexican or Guatemalan citizens being stuffed into Paddy wagons
on the Arizona border. This is not a racist comment but with the
Mexican illegal immigrants, bing rounded up and shipped back across the
border is a way of life with no social stigma. For a nice clean living
Canadian, being thrown into an immigration detention cell for taking
money for rent is a devastating experience. In one case, a mother and
her son were thrown into jail for 5 days in Phoenix when she went to
Phoenix from White Rock BC. Her husband owned 18 units and HAD a
property manager. Unfortunately, he also died in the arms of that
female property manager and his widow then fired the property manager
and she and her 20 year old son went to Phoenix to collect the rent and
hire another property manager.
The property manager (who knew the law as everyone in Arizona does)
phoned Homeland Security who showed up and arrested mother and son and
threw them into the notorious Phoenix Immigration hell with some 300
other illegals. To rub salt into the widow's wounds, the property
manager ended up with the property because she was a second mortgage
holder on the property and the property fell into default because of
the widow's cash flow troubles, largely because she could not go to
Phoenix to hire another property manager.
For instance, for 'you', this kind of arrest could result in
imprisonment for a usual five days in a US immigration jail until you
posted $5,000 bail each and then being banished from the US for five to
ten years.
It does not stop there. This type of conviction would stop
you getting on an airplane which stopped in the USA on the way to
Mexico. AND, under new US laws that have been proposed
but not yet actually put in place, the arrest and banning would stop
your Nov 6 trip to Cancun because people in this position will not even
be allowed on commercial airliners that are flying over any part of the
US. To get to Cancun, you would have to fly from Calgary or Vancouver
to London England and then back to Mexico City and 'then' to Cancun and
reverse it to get home.
This may be overkill but 'You' are / were lucky that the inspector gave
you the correct advice BEFORE you put your foot in it.
By the way, for income tax You ALSO HAVE TO FILE A 1040NR US TAX RETURN
WITH A SCHEDULE E AND A SCHEDULE 4562 EACH. Then the same income gets
put on Schedule T776 of your Canadian return. If you have paid tax to
the US, you will claim it as a credit on Canadian forms T2209 and T2036.
These older questions will help you AS WELL.
QUESTION: Hello David,
I'm living in Vancouver, finally paid off the student debt but don't see myself getting into
the expensive Vancouver market. I do however like to ski and was thinking of buying an
inexpensive trailer (25k Cdn) in Maple Falls Washington.
However I'm not sure what other expenses I should expect given that it's in the US.
I'm not trying to make this an investment with a high return, but I would like to do some handy work to it to increase the value. If I add about 10k worth of value, how would that affect my taxes in the long term?
Thanks for the advice.
----------------------------------------------
david ingram replies:
One of my favourite weekends ever was in 1973 at the Chandelier (think it has a different name now) when marooned at SnowLine because of the gas shortage when one could only buy gas on odd days if your licence plate ended with an odd number and even days when it was an even number.
Strangely, it was that weekend 34 years ago that lets me answer your question now.
The cabin I was staying in was not a rental but was built by the fellow who owned it. When he was building it, buddies would come down and help him and one weekend, the INS raided the spot and deported a bunch of his friends for working in the US.
He was fine building it because he owned it but no one else can hammer a nail, paint a board, install a sink, or carry a shingle if they are not either an owner or a legal US citizen or US resident with a green card.
If your buddy is working and living in the US with a TN, H1, O1, P1, L1 or any other visa but a green card, they cam NOT help you either.
And, if you are intending to rent the trailer out 'EVER', 'you' can NOT hammer a nail, sweep the front steps or clean the toilet.
Assuming you are buying this trailer on its own lot, when you go to sell, you will owe the US income tax on the profit.
If it is your only piece of real estate at that time, you will not owe Canada any tax because you can claim it as your personal residence if you have not bought another place.
-------------------
However, I would far prefer that you stretched your resources to buy something in Canada to live in and combine your present rent and the payments you would have to make for the trailer to buy your home in Canada. If you can't afford a one bedroom, buy a studio. Go down to Ikea on the Lougheed highway and look at how much they can put into a small space.
Interestingly, I read the other day that IKEA has now sold enough furniture in North America that 10% of all children are conceived in an IKEA Bed. Now that is information worth knowing.
Good luck
.
QUESTION:
If a Canadian citizen purchases real property in the U.S. are they
required to have a U.S. Social Security Number? Am I correct that my
tax liability will be to the U.S., whilst reporting my income to the
CRA but with offsetting foreign tax credits due to paying U.S. income
tax? For liability purposes, would it be more beneficial tax-wise to
hold the U.S. properties under a Canadian or U.S. corporation? Thank
you.
-------------------------------------------------
david ingram replies:
Assuming that you are going to rent the property out, you will need an
ITIN (Individual Taxpayer Identification Number). Fill in a W-7 and
submit it with your first tax return or try and get it at the bank
where you get your mortgage.
I do not suggest a corporation in either country unless you want to
spend a couple of thousand dollars a year extra on accounting. As a
foreigner with a US corporation, you will need to fill in form 5472
with your 1120 corporation tax return. Then, because the mind and
control of the corporation is in the hands of a Canadian resident, you
will need to file again in Canada.
This older Q & A may help
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,
______________________________________________
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 assessed 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.
----
--QUESTION:
We have a rental property in the US. Can I claim the property taxes paid on my condominium as a rental expense deduction on my Canadian taxes? Form T776 mentions only Canadian property taxes however, the general guide states that all expenses can be deducted.
--------------------------------
david ingram replies:
Anything
that can be claimed on schedule E of the US return can be claimed on form
T776
You need to do your Schedule E 1040NR first and then convert the US
figures to the T776 on your Canadian return. If the condo is in
Arizona, you would do a 140NR or if in California, a 540NR.
There is no
state tax in Florida, Texas or Nevada, the other three popular places for a
Canadian to have a rental US condo.
The difference between the two
counties is the method of claiming depreciation. In the US, you MUST
calculate the depreciation and include it even if it creates a loss. The
good news is that the operating loss caries forward as a future deduction
against rent OR Capital Gains as opposed to non-resident losses in Canada which
unfairly disappear into the ether.
In Canada, you do NOT have to claim it
and if you do, can only claim enough to create a zero rental. Depreciation or
CCA (capital cost allowance) as we call it can NOT be used to create or increase
a loss.
Make sure that you do the US returns, particularly if you are
losing money. The penalty can be a minimum of $1,000 to $10,000 PLUS 30%
of the gross rent for failure to file a US rental return by a
non-resident.
We, of course, are ideally suited to look after these for
you by fax, snail mail, email or courier.
-----
On April 6. 2008, David
Ingram wrote:
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 line
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. e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
However, I
regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I wrote this on
Dec 25, 2007 since June 16th, my 'spammed out' box has
47,941 unread messages, my deleted box has 16645 I have actually looked
at and deleted and I have actually answered 1234 email questions for
clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to
48 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', 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 expert
US Canada Canadian American Mexican Income Tax service and help.
Hi David,
I plan on purchasing a Residential Short Term rental property in Florida in my
personal name.
What is the tax implications on the yearly revenue?US and Canada?
When I sell the property what are the tax implications on the equity?
Regards,
-------------------------------
david ingram replies:
Too busy to deal with this - these older questions will / should give
you what you need. There is no state income tax in Florida.
----------------
QUESTION: Buying real estate in the US.
Hi David,
I'm sure you're getting a lot of these inquiries lately!
If I were to purchase a property in the US, not to be rented out, what am I obligated to declare at tax time?
Do I have to declare in Canada and the US?
If I were to sell said property, I understand that the US gov't withholds approx 30% of any capital gains. Is that correct? Would I also have to declare this in Canada?
Many thanks,
--------------------------------
DAVID INGRAM REPLIES:
I am and here are a bunch of older answers that may help.
QUESTION:
IS IT BETTER TO BUY A HOUSE IN THE U.S. IN YOUR PERSONAL NAME OR A COMPANY NAME.
--------------------
david ingram replies:
I think you are 99 out of a 100 better off to buy in your own name. If
it is a rental - do NOT work on it yourself.
QUESTION:
What is the best way to either structure a company (Canadian or USA)or
set myself up personnel to shelter / minimize taxes paid as a Canadian
resident, working in BC, investing in real estate in San
Diego,California, USA?
-----------------------------------
david ingram replies:
There is no one best way because everyone is different in terms of
estate, family, immigration and other issues.
In general I do NOT recommend buying in the name of a company. If the
desire is to escape public liability, you do that with a good insurance
policy.
Directors can be held liable for many, if not 'most'
responsibilities of a limited company if the creditor or wronged person
wants to pursue it. Think of the driver of a car belonging to a limited
company. They sue the company AND the driver.
If you incorporate cross border, be prepared for an
extra $2,000 a year in accounting plus legal fees plus extra state
filing fees. California where you are thinking of investing, has a
minimum $800 a year government filing fee for an LLC as an example even
if you lost or lose money on the rental..
The following older Q & A may help.
QUESTION:
We just purchased property in Spokane Washington( a 4 plex apartments)
We plan on renting out 3 of the units and keeping one. I was told by
the border crossing inspector,
that I have to hire a rental agency in order to rent out the apartments.
and I also have to have a property manger full time..
We will be at our apartment approx 2 times a month..
So we do not need a property manager.
Do you know if this true,, or please direct me to the correct person
that would be able to help me.
Thanks for your time.
----------------------------------------------------------
david ingram replies:
You need a property manager if you do not want the strong possibility
of going to jail for a few days before being deported and then not
allowed back in the USA. For a story about US Immigrations hell for a
Holiday Inn Manager, try
http://apostille.us/news/local_holiday_inn_express_manager_in_jail_on_immigration_charges;_husband_fights_for_her_return.shtml
or how about a married woman's ordeal in Georgia
for a traffic violation at
http://www.canada.com/ottawacitizen/news/story.html?id=f4f1d2fb-07ae-4560-8f6c-703acf8146fb&k=0
Crossing the border when you have an ad running to show the premises
and saying you are going down to spend the weekend in your holiday home
(i.e lying to the HOMELAND Security official) could result in seizure
of your vehicle and a ban for up to 10 years under their ER (Expedited
Removal) process. In other words, it is more serious to lie to the
guard at the border than it is to do the work.
You 'could' actually show the property for rent, but you can NOT write
out a contract for rent or collect a single rent cheque (check) or cash
for rent in the United States. There is nothing new about this. The
first time I ran into it was in 1972 or 1973.
If you are physically there, you can NOT cut the grass, shovel the
sidewalk, paint or decorate or repair or fix or remodel or improve or
take out the garbage for any part of the rental property.
You can paint and clean your own unit if it is NEVER rented or intended
to be rented. You can not paint and clean up getting the property ready
for rent so DO NOT make the mistake of thinking you can live in one,
clean it up and remodel it and then rent it out and do the same for
another one and then another one and another one. If you do this and
one of your tenants (who maybe doesn't like you because you evicted
them or told them to turn their stereo down when you happen to be in
town or for any other reason) read my website, (or the uscis website)
he or she would find out that you can NOT do this stuff and could phone
the Homeland Security office or write an anonymous letter and you could
be arrested in November 2008 for something you did in December 2007.
This may seem unreal, but in US terms, working without a visa is just
as serious in law as the spontaneous robbing of a convenience store and
the penalties can be worse. Think of those nightly news shows with 28
illegal Mexican or Guatemalan citizens being stuffed into Paddy wagons
on the Arizona border. This is not a racist comment but with the
Mexican illegal immigrants, bing rounded up and shipped back across the
border is a way of life with no social stigma. For a nice clean living
Canadian, being thrown into an immigration detention cell for taking
money for rent is a devastating experience. In one case, a mother and
her son were thrown into jail for 5 days in Phoenix when she went to
Phoenix from White Rock BC. Her husband owned 18 units and HAD a
property manager. Unfortunately, he also died in the arms of that
female property manager and his widow then fired the property manager
and she and her 20 year old son went to Phoenix to collect the rent and
hire another property manager.
The property manager (who knew the law as everyone in Arizona does)
phoned Homeland Security who showed up and arrested mother and son and
threw them into the notorious Phoenix Immigration hell with some 300
other illegals. To rub salt into the widow's wounds, the property
manager ended up with the property because she was a second mortgage
holder on the property and the property fell into default because of
the widow's cash flow troubles, largely because she could not go to
Phoenix to hire another property manager.
For instance, for 'you', this kind of arrest could result in
imprisonment for a usual five days in a US immigration jail until you
posted $5,000 bail each and then being banished from the US for five to
ten years.
It does not stop there. This type of conviction would stop
you getting on an airplane which stopped in the USA on the way to
Mexico. AND, under new US laws that have been proposed
but not yet actually put in place, the arrest and banning would stop
your Nov 6 trip to Cancun because people in this position will not even
be allowed on commercial airliners that are flying over any part of the
US. To get to Cancun, you would have to fly from Calgary or Vancouver
to London England and then back to Mexico City and 'then' to Cancun and
reverse it to get home.
This may be overkill but 'You' are / were lucky that the inspector gave
you the correct advice BEFORE you put your foot in it.
By the way, for income tax You ALSO HAVE TO FILE A 1040NR US TAX RETURN
WITH A SCHEDULE E AND A SCHEDULE 4562 EACH. Then the same income gets
put on Schedule T776 of your Canadian return. If you have paid tax to
the US, you will claim it as a credit on Canadian forms T2209 and T2036.
These older questions will help you AS WELL.
QUESTION: Hello David,
I'm living in Vancouver, finally paid off the student debt but don't see myself getting into
the expensive Vancouver market. I do however like to ski and was thinking of buying an
inexpensive trailer (25k Cdn) in Maple Falls Washington.
However I'm not sure what other expenses I should expect given that it's in the US.
I'm not trying to make this an investment with a high return, but I would like to do some
handy work to it to increase the value. If I add about 10k worth of value, how would that
affect my taxes in the long term?
Thanks for the advice.
----------------------------------------------
david ingram replies:
One of my favourite weekends ever was in 1973 at the Chandelier (think it has a different name now) when marooned at SnowLine because of the gas shortage when one could only buy gas on odd days if your licence plate ended with an odd number and even days when it was an even number.
Strangely, it was that weekend 34 years ago that lets me answer you question now.
The cabin I was staying in was not a rental but was built by the fellow who owned it. When he was building it, buddies would come down and help him and one weekend, the INS raided the spot and deported a bunch of his friends for working in the US .
He was fine building it because he owned it but no one else can hammer a nail, paint a board, install a sink, or carry a shingle if they are not either an owner or a legal US citizen or US resident with a green card.
If your buddy is working and living in the US with a TN, H1, O1, P1, L1 or any other visa but a green card, they cam NOT help you either.
And, if you are intending to rent the trailer out 'EVER', 'you' can NOT hammer a nail, sweep the front steps or clean the toilet.
Assuming you are buying this trailer on its own lot, when you go to sell, you will owe the US income tax on the profit.
If it is your only piece of real estate at that time, you will not owe Canada any tax because you can claim it as your personal residence if you have not bought another place.
-------------------
However, I would far prefer that you stretched your resources to buy something in Canada to live in and combine your present rent and the payments you would have to make for the trailer to buy your home in Canada. If you can't afford a one bedroom, buy a studio. Go down to Ike on the Lougheed highway and look at how much they can put into a small space.
Interestingly, I read the other day that IKEA has now sold enough furniture in North America that 10% of all children are conceived in an IKEA Bed. Now that is information worth knowing.
Good luck
.
QUESTION:
If a Canadian citizen purchases real property in the U.S. are they
required to have a U.S. Social Security Number? Am I correct that my
tax liability will be to the U.S., whilst reporting my income to the
CRA but with offsetting foreign tax credits due to paying U.S. income
tax? For liability purposes, would it be more beneficial tax-wise to
hold the U.S. properties under a Canadian or U.S. corporation? Thank
you.
-------------------------------------------------
david ingram replies:
Assuming that you are going to rent the property out, you will need an
ITIN (Individual Taxpayer Identification Number). Fill in a W-7 and
submit it with your first tax return or try and get it at the bank
where you get your mortgage.
I do not suggest a corporation in either country unless you want to
spend a couple of thousand dollars a year extra on accounting. As a
foreigner with a US corporation, you will need to fill in form 5472
with your 1120 corporation tax return. Then, because the mind and
control of the corporation is in the hands of a Canadian resident, you
will need to file again in Canada.
This older Q & A may help
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,
______________________________________________
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 assessed 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.
----
--QUESTION:
We have a rental property in the US. Can I claim the property taxes paid on my condominium as a rental expense deduction on my Canadian taxes? Form T776 mentions only Canadian property taxes however, the general guide states that all expenses can be deducted.
--------------------------------
david ingram replies:
Anything
that can be claimed on schedule E of the US return can be claimed on form
T776
You need to do your Schedule E 1040NR first and then convert the US
figures to the T776 on your Canadian return. If the condo is in
Arizona, you would do a 140NR or if in California, a 540NR.
There is no
state tax in Florida, Texas or Nevada, the other three popular places for a
Canadian to have a rental US condo.
The difference between the two
counties is the method of claiming depreciation. In the US, you MUST
calculate the depreciation and include it even if it creates a loss. The
good news is that the operating loss caries forward as a future deduction
against rent OR Capital Gains as opposed to non-resident losses in Canada which
unfairly disappear into the ether.
In Canada, you do NOT have to claim it
and if you do, can only claim enough to create a zero rental. Depreciation or
CCA (capital cost allowance) as we call it can NOT be used to create or increase
a loss.
Make sure that you do the US returns, particularly if you are
losing money. The penalty can be a minimum of $1,000 to $10,000 PLUS 30%
of the gross rent for failure to file a US rental return by a
non-resident.
We, of course, are ideally suited to look after these for
you by fax, snail mail, email or courier.
-----
On April 6. 2008, David
Ingram wrote:
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 line
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. e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
However, I
regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I wrote this on
Dec 25, 2007 since June 16th, my 'spammed out' box has
47,941 unread messages, my deleted box has 16645 I have actually looked
at and deleted and I have actually answered 1234 email questions for
clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to
48 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', 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 expert
US Canada Canadian A