British Columbia Canadians Buying Property in Point

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David
We are Canadians living in the Lower Mainland.
We are considering buying a property in Point Roberts for approx. $150,000.00 US. 
We want this property to be used mainly as rental property, however, we may choose to use it occassionally as a get-away for ourselves when not occupied. 
What are the tax implications on the rental income, and what happens should we sell?
Thank you for your assistance.
PXXXXXXXXXXXX
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david ingram replies:
Good on you.  If it was not for people making your kind of investment, we would go out of business.
1. Asuming that you ae both going to own the property, you will each have to file a US 1040 NR and Schedule E to report your share of the rental income.
2.    You will then convert the US dollars to Canadian dollars and report the rents on each of you r Canadian T1 geeneral returns on Canadain Schedule T776.
3.    If you owed tax to the US, you would claim the federal foreign tax credit on Schedule 1 and the BC provincial foreign tax credit on schedule 428.
If you use it personally, you have to prorate the expenses according to the percentage of persoanl use to business use.  
In the US the rules are that you cannot claim rental losses against other income if you use the unit more than 30 days or more than 10% of the days it has been rented.  Canada's rules are more lenient but if you use the waterfront home for July and August and then try and rent it the rest of the off season, Canada will also turn down the rental loss.
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When you sell it, the US will charge an alternative minimum tax of 26% of the actual profit.
Canada will tax you on 50% of the profit and only allow a foreign tax credit of 50% of the tax paid to the US.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 
New email to [email protected]
www.centa.com www.david-ingram.com
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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]
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