holiday home in Montana -


We are thinking of purchasing a home in Montana and only live in it under 6 mo. When we sell it, (the cost is $350,000.00) will we have to pay some kind of tax?   

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david ingram replies:

If it goes up in value, you will have to pay both Montana and the US federal government a non-resident capital gains tax.

However, you will also have to report it on your Canadian return and most, if not all of the US taxes will be deducted on your Canadian return as a foreign tax credit on forms T2209 and T2036.

I have no time for a new answer and this is the only one I intend to answer today of over 50 received.

These older answers should help.

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Hi
I am a Canadian citizen and would like to purchase a property in Houston Texas . Is it possible , would i get some sort of a residency id , Using this as a second home escape from the winter. Do i have to change my no: plates on my car to Texas, can i register one of my vehicle in teas.
would going to the US/ immigration cause a problem having a second house in teas.
Can you please give me some information with regards to this.
Thank you
 
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david ingram replies:
 
There is no problem in purchasing anywhere in the USD provided you do not have a criminal past (even a minor very teeny one), and keep a house of equal value in Canada and spend more than six months in Canada in your home province (to keep your Canadian medical plan valid unless Ontario where you only need to spend more than 153 days).  If you are just on vacation, your Canadian licence plates will suffice.
 
In addition, if you are in the US for more than 183 days under their substantial presence rules, you will need to file USD form 8840 and a 1040NR as well.  See the April 1994 (nothing new here) newsletter at www.centa.com in the top left hand box for more info on this.
 
This slightly older Arizona question will help.
 
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QUESTION:

My husband & I would like to take advantage of the current exchange rate as well as the deflating housing market in Arizona.  We are concerned about being taxed on our 'world income' which is a Canadian gov't pension and RRSPs as well as other Canadian real estate holdings i.e. two Canadian investment properties and one cottage.  We are concerned about what happens to our estate when one or both of us dies.  You probably have answered this question a million times before but I couldn't pull up information from you site. It may be because I just registered today. Looking forward to your response. 
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david ingram replies:

assuming you are buying a vacation property and not an investment property, Canada will treat it the same as if it was at the Lake of the Woods in Ontario, Lake Okanagan in BC or Lake LaBarge in the Yukon.

When sold, Canada, Arizona and The US federal government will all want capital gains tax if it had gone up in value.  Canada will give you credit for the tax paid to the US and Arizona.

If one of you dies with a total world wide estate of more than $2,000,000 in 2007 or 2008 or $3,500,000 in 2009 (the amounts have not been set for 2010 and beyond) the unit would be subject to US estate tax on a pro-rata basis. However, Canada would allow a foreign tax credit against any capital gains tax incurred by the deemed sale on death.

If you are in the US for less than 120 days a year, there is no US tax filing liability.  If you are there for 140 days a year for two years in a row or more than 120 days a year for three years in a row, you trigger the necessity to file a US 1040NR tax return each under the substantial presence test.

Go to www.centa.com and read the April, 1994 newsletter in the top left hand box for an explanation of how and why.

If you are intending to rent the unit the rules are different and this older Q & A will likely help you.

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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.
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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.
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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

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Hi Mr Ingram
 
I tried into your website to see if I can get any information on the above topic with regards to
taxes and other situations that may come about. Are you able to guide me to the specific section in your website?
 
Many thanks
 
---------------------------------------------------- david ingram replies You will file a 1040NR with schedule E and 4562 and A Hawaii N-15 and GET tax return. In Hawaii, there is a GET or General Excise Tax in addition to what you will find in the following.  There is a GET which applies to all rentals of 4% and a further TAT (Transient Accommodation Tax) of 6% on rentals that are holiday rentals when you rent by the day or week. the rest is answered by this
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Expert:         taxman@centa.com
Date:           Saturday March 03, 2007
Time:           02:22 PM -0500

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.


Subject: US Condo and Rental Expenses -------------------------------- 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.  Hawaii would be a 1040NR and a N-15 Hawaii state tax. 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.
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On November 10, 2007, 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 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 write this on Oct 18, 2007 since June 16th (124 days), my 'spammed out' box has 34,939 unread messages, my deleted box has 11854 I have actually looked at and deleted and I have actually answered 1078 email questions for clients and strangers without sending a bill.  I have also put aside 622 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax help
Therefore, if an email is not answered in 24 to 36 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 help. 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:
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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." e bankruptcy expert  US Canada Canadian American  Mexican Income Tax help.
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This is not intended to be definitive but in general I am quoting $900 to $2,900 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.
 
$1,100 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
$2,900 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.
 
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 $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
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) 2 16(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. Advice on bankruptcy  e bankruptcy expert  US Canada Canadian American  Mexican Income Tax help.
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