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QUESTION: We understand that there is a 25% tax on
gross rent from investment properties
owned by non-canadians who have not
filed their proper forms. We were
ignorant and knew not of what we were
doing when we bought our rental
property... which runs at a loss. In
Montreal the bienvenue tax is over six-
thousand dollars (this is the tax all new
home-owners must pay in Montreal).
Can we deduct this as a tax item on our
federal return this year? Next year we will
have to be sure to fill out all the proper
paperwork.... Thanks for your response.
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david ingram replies
The 25% tax is a withholding tax, not a tax if you get the proper return in within 24 months. You will have to pay the 25% first, but if we file a return under Section 216(4) with the proper whining letter, you will get it back if you actually lost money in the rental. In fact, the 2003 216(4) return is not actually due until June 30, 2004 so we do not even need a whining letter if you get it (the financial figures) here in the next ten days.
I would be happy to look after this for you because it is a sort of specialty. All together, we lkikely prepare over 200 non-resident tax returns for Canadians with US property or Americans with Canadian Property. Throw in a couple of Germans, a couple of Australians, a Spaniard, Italian, Swede and New Zealanders and even an Antartica worker and you can see that doing it by mail is simple. An advantage of our doing it is that we can also prepare the US andState return with the proper tax credits and you do not need to try an train a local accountant. (It can take 20 to 30 hours to figure it out the first time).
And, if you have a local accountant that you really want to use, we prepare a dummy US return with all the proper figures in the right place so that your accountant can just plug in the figures without having to work at it.
Let me know if I can help.
The Bienvenue Tax is considered a capital addition to the cost of the building. We have a PPT (property purchase tax) in BC with the same characteristics.
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