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I have just purchased a lake view lot in Vernon BC. as an investment. How do I go about insuring that the interest paid on the loan, taxes, etc can be deducted from my personal income tax each year.
What will my tax responsibility be a the time that I finally sell the
property?
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david ingram replies.
Becuse you have stated that you bought the lot as an investment property to sell, technically, you should be paying straight income tax on any profit.
The good news is that if that is the case, you should be able to deduct the interest and taxes against that property although that is not guaranteed as the courts have gone both ways.
If you bought it as a investment with the idea that any profit would be a capital gain, you can NOT deduct interest and taxes against the profit officially.
I know of dozens, if not hundreds who have deducted them but there are enough cases that say that you cannot deduct carrying charges against a capital asset such as gold or non-dividend paying stocks or a vacant lot.
This is not the news you wanted to hear but is the law as it exists today.
If you have other sources of income other than wages you can likely arrange to make the interest deductible. Goto www.centa.com and read the November 2001 newsleter onmaking your mortgage interest deductible. It could just
have easily being titled "make your mortgage, sailboat, vacant lot or car loan deductible."
I will say that it is rare for the CCRA to enforce the no deduction of interest against the sale of the lot but if they do, you will lose and it will be an expensive "maybe"
.
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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