Wet Crawl space - Are repairs a tax dedcution - Ed Witzke Doctor Death - Building Inspections -



My question is: Canadian-specific

QUESTION: Hi
I just had a home inspection done on a 43 year old house and they indicated to me the to replace the drain tile, to prevent the water from coming into the crawl space. The owners indicated they just had a drainage company come in and pour concrete in the crawlspace and cleaned it out? Is this enough or does more have to be completed?

Does cement take a long time to dry in a crawl space under the house.
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david ingram replies:

Putting the cement in without fixing the drain tile just means that you will have wet cement instead of mud.

A proper mixture of poured cement would be dry in 8 hours to a day in ordinary temperatures.

If your cement is hard but wet on the surface, it means you have a water problem and need drain tile and maybe a sump pump.  If this house is 43 years old and this has just started, you have to look around the neighbourhood.  A
Someone nearby may have built a wall that is redirecting an underground water source or just as likely, you may have a leak in the main water line coming into the house from the municipal water supply.

It may also be your next door neighbour's line leaking.

Check it out.  water leaks cause verrrrry expensive damage.

Make sure you have a detailed cost estimate before buying the property as is.  In my opinion, the Best Building inspector in the Business in the Lower mainland and Okanagan is Ed Witzke of Witco Building Inspections.  He was the first one to point out (by at least two years) the leaky condo problem in Vancouver. 

If you want another opinion, Ed's number in Vancouver is (604) 732-0617 - his cell is (604) 309-3812.  His web site is www.edwitske.com.

The CMHC picked Ed to prepare their video on how to buy a condominium. It is an old one now but should be Available from C.M.H.C. Call 604-731-5733
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This older question explains it all
My_question_is: Canadian-specific
Subject:        Accruing Special Assessments
Expert:         taxman@centa.com
Date:           Friday March 24, 2006
Time:           11:05 AM -0800

QUESTION:

Hi David,

I own a rental condominium in BC.  A Special Assessment has been levied against all owners to pay for repairing damaged stucco siding.

I have two questions:

1.  Is the special assessment deductible against rental income as it is due to poor maintenance practices in previous years?

2.  As the special assessment is due to insufficient money being spent on building maintenance expenses in previous years, can I accrue the expense against 2005 income even though the assessment is not payable until 2006?

Thank you.

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david ingram replies:

1.      The answer is yes if the unit was always rented. If you rented it out because you discovered it was a leaky unit and someone told you that you could deduct the repairs if it was a rental, the answer is NO - it must be added to the Adjusted Cost Base (ACB).

2.      Rentals are assessed on a cash basis.  You can only claim it in the year paid.  If you borrow the money to pay for it, it is a deduction AND you can deduct the interest on the repair loan. So if it was $10,000 as an example and you have a non-deductible mortgage on your own house and you have the $10,000 in hand, pay your non-deductible mortgage down $10,000 worth and then borrow the $10,000 to fix the rental.  See the November 2001 Newsletter at    www.centa.com 
 ( top left hand box) for more information on this.

I wrote another reply for this several years ago for COLCO (Coalition of Leaky Condominium Owners).  You can read it at
http://www.myleakycondo.com/ingram.htm

When Mike Farnsworth was the BC Minster of Housing, he wrote an interesting letter to the CRA.  It is also on the COLCO site at http://www.myleakycondo.com/farnworth.htm

People with leaky condos would be well advised to look over the whole COLCO site at http://www.myleakycondo.com/faqs.htm

This is still a major problem out there. Last night I did a return for a Boston owner of a Vancouver Leaky Condo.  Their special assessments in the last three years have been over $52,000 - The building was nine years old when they bought it and there were numerous referenced to leaks in the Strata Council Meetings.  However, the Realtor representing them did not mention the fact at all and was acting as a dual agent.

My recommendation is that if you are a buyer, you NEVER sign a dual agency agreement with your Realtor.  Have your own buyer's broker when you buy.  Make absolutely sure that you have charged your Realtor with the responsibility of protecting "YOUR" interests and informing you of everything that may be wrong.  If the Realtor has NOT read the minutes of the strata council in the building that he or she is trying to sell you a unit, find another Realtor.

Incidentally, there is NOTHING wrong  with buying a leaky unit as long as you know it and have taken that fact into account with your purchase offer.

My apologies to those conscientious Realtors who have performed well and honourably through this crisis but for every Carmen Maretic, or Ross McDonald or John Mckilligan or Christine Louw who does disclose everything for their buyers, there are a dozen who just seem to keep their mouths shut and let the buyer beware.

And one other point.  I understand most building inspectors who inspect a condominium will NOT give an opinion on the building itself.  For one thing, they are not qualified.  If you need a building inspection, get hold of Dr Death (as the Realtors call him).  Ed Witzke was the first person to expose leaky condos in Vancouver.  We did it together on January 27, 19"8"7 on CKO Radio when we did a 90 minute story on it.  Ed is a graduate architect from UBC but does not act as an architect.  Ed did NOT blame builders particularly.  He blamed the architects for designing buildings and not inspecting them as they are built.

I would point out that more than 70% of the leaky condos today were designed and built AFTER our broadcast and for the next 5 years

E was a voice in the wind until the David Barrett Commission pointed out the problems.  Now what did the BC Architectural Institute do after our Broadcast.  Instead of going to ED and asking "what do we do ED?",  I understand that the institute fined him $10,000 for conduct unbecoming an architect. Remember, it wasn't the building code itself.  If so, 100% of the buildings built would have leaked.  No it was the design and the use of improper materials.  It wasn't stucco by itself, it was the application of stucco without proper flashing.  It was using water logged hemlock in sealed walls where it could dry-rot without any new moisture, it was installing j-tubes backwards and a dozen other things.

Was Ed's work recognized? YES!!!  He was hired by the CMHC  to produce a video on how to buy a condominium which you can buy from the CMHC.

A Condo Buyer's Guide - Video

Available from C.M.H.C. Call 604-731-5733

A private home inspector shows you what to look for and how to evaluate a condominium for potential moisture problems before you buy. Produced by Double M. Productions and sponsored by CMHC, the BC Federation of Labour, the BC Ministry of Municipal Affairs and the Real Estate Institute of BC.

  He also authored a best selling book on the same subject.  You can buy the book at Amazon or Abe Books for about $30.00 at

http://dogbert.abebooks.com/servlet/SearchResults?sts=t&an=ed+witzke&y=7&x=48

And if you are thinking of buying any building, there is a wealth of free information, articles and tips at his site at

http://www.witcobuildinginspection.com/

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SUGGESTED PRICE GUIDELINES - May 17, 2008

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 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) expert  US Canada Canadian American  Mexican Income Tax  service help.
pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & 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 $450 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. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 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.
 
$1,600 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

$1,700 would be for two people with income from two countries

$3,000 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 $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
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 $900 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.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 








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