Canadian citizen buying US Las Vegas real estate (presale) - international non-resident cross border income tax help estate fami

> QUESTION:
>
> I would like to know of any precautions I should consider before 
> purchasing an American condo in Las Vegas as a presale.  I am a canadian 
> citizen.  Is there any additional taxes I have to endure?
> Thank you very much!
>
>
> --------------------------------------------------------------------------
> david ingram replies:
>
> I would worry about the condo completing and your being able to close the 
> deal.
>
> Construction costs in Las Vegas have risen 20% in the last year and there 
> is a real shortage or materials and labor.  as you will know, projects 
> have been stopped locally and trhere have been a couple of examples now of 
> developers returning the deposits and attempting to resell the units at 
> higher prices.
>
> As far as taxes go, the official position is that you wil pay tax to the 
> US federal governemtn and then report the income again in Canada.  Becasue 
> it sounds like you are intending to flip this, Canada will treat it as 
> straight income and then allow credit for the tax paid to the US on line 
> 431 of schedule 1 of your Canadian return.  If this does not use up all 
> the tax credit, you can claim the excess on the equivalent line of the 
> provincial form 428.
>
> Becaue buying a presale usually involves dealing only with the developer's 
> people, I advise you to take the contract to a local real estate lawyer 
> and have it checked over before signing.
>
> Watch out for contracts that require interim draws and / or personal 
> guarantees that could be called on in the event of a disaster.
>
> These other two questiosn will explain the Canadian side which is more 
> complicatred than the American side.
>
> ----------------------------------------
>
>
>
> My question is: Canadian-specific
>
> QUESTION: Hi,
> If we buy a fixer-upper to renovate and flip without renting it out what 
> are the allowable expenses for deductions?
> Thanks
>
> ____________________________________________________________________
> david ingram replies:
>
> In general anything you spend to do the fixing is a deduction from the 
> final sale profit.  This would include but is not limited to:
>
> materials, subcontractors, legal, accounting, real estate commissions, 
> surveyors, appraisals, interest on the mortgage, interest on a building 
> loan, interest on material loans (maybe because you used a credit card to 
> buy), truck expenses to get supplies and transport tools, afvertising, 
> utilities, photography, landscaping, trash removal, dumping fees, building 
> permits, architects fees, engineering fees, home inspection fees, 
> insurance, helpers, etc.
>
> Remember that any profit is taxable at straight income rates on line 135. 
> Flipping or renovating does NOT create capital gains tax.  The following 
> older Questions will explain that a bit.
>
> ______________________________________________________________________
> DAVID
>
> A "friend" who is a BC realtor and has the flipping  question presented to 
> her
> from time to time  recently attended a seminar that was related to this
> subject.  As a result she was able to provide me with some interesting
> thoughts to ponder concerning "intent" and "professional background" when 
> it comes to "flipping houses"
> and tax in Canada.  You may possibly be looked at as a Developer all the
> subsequent implications.
>
> Read the full article at <http://tax.centa.com/comment.php?mode=view&cid=8 
> <http://tax.centa.com/comment.php?mode=view&cid=8>>
>
> ----------------------------------------------------------------------------
>
> david ingram replies:
>
> In Canada, the purchase and sale of any piece of real estate with or 
> without
> renovations is considered a sale and subject to straight income tax 
> unless:
>
> 1. It was bought for and clearly used as your personal residence and was
> intended to be used for an indefinite period of time which is usually in 
> the
> five to ten year range.
>
> 2. It was bought as and used as a recreational property
>
> 3. It was bought for the purposes of earning long term rental income.
>
> In the case number 1, there is no tax.
>
> In the case of numbers 2 and 3, the sale is treated as a capital gain and
> only fifty per cent of the profit is taxed at your regular tax rates.
>
> Lots of / many (anyone caught) are taxed full tax rates when they buy a
> house, move in, fix it up and sell it a year or two later and then do
> another one.
>
> Of course, most are NOT caught in these circumstances.
>
> However, "any" flip is going to be straight income unless the person can
> prove that they bought it to live in and then:
>
> * married a person with three children and it is not big enough (had to 
> sell
> and bought bigger)
>
> * were transferred to another city (had to sell to buy in new city)
>
> * lost their job, were injured, etc. and can no longer afford to move in. 
> In
> this case, they would have to show that they had the finances to have paid
> for it when they bought it. (Not only can they not afford it but they have
> moved into their parents' basement (boomeranged).
>
> * Inherited a house from their parents and do not need it any more. (are
> living in the new house)
>
> You can read more by going to www.centa.com <http://www.centa.com> - click 
> on tax guide in the top
> left hand corner and then click on the "capital gain" section.
>
> david
>
> This older q & A also gives an idea
>
> My daughter is closing on a presale Yaletown condominium this summer.  She
> is working until Christmas in Alberta.  She returns to Vancouver from Jan 
> to
> May and if the job becomes a full time position, then she may return to
> Alberta to live.  At the time of presale, February 2004, we thought that 
> the
> suite would be assigned to her and that she would live in the suite.
>
> I was hoping that she could declare the suite as her permanent residence
> since she is only renting in Alberta and the work is not permanent.    In
> May 2007, she could decide to keep or sell the suite.
>
> What does she need to do in order to qualify the suite as her permanent
> residence?
>
>  -----------------------------------------
>
> david ingram replies:
>
> There is no absolute answer because you can call a toad a frog all day 
> long
> but it is still a toad.
>
> To be a principal residence and tax free for income tax purposes, the
> property must have been bought by her to live in and she HAS TO move into
> it. - No exceptions that I know of.
>
> You can expect that the CRA will be looking at "every" quick resale in 
> EVERY
> downtown building.
>
> In deciding if it is a capital gain or a flip, the CRA will be looking at
> the suitability of the unit as a residence, the ability to pay for the 
> unit
> and past and even future performance.
>
> In other words if she claimed this one as a principal residence and then 
> did
> it again a year later, the CRA would have every right to go back and
> reclassify the first one.
>
> david 
> ingram ---------------------------------------------------------------------------------------------------------------
>
>
> 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)
>
> email to taxman at centa.com <mailto:taxman at centa.com>
> www.centa.com <http://www.centa.com/> www.david-ingram.com 
> <http://www.david-ingram.com/>
>
> 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 <http://www.centa.com/>. If you forward 
> this message, this disclaimer must be included."
>
> Be ALERT,  the world needs more "lerts"
>
> David Ingram gives expert income tax & 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 $400 for 15 minutes to 50 minutes (professional 
> hour). Please note that GST is added if product remains in Canada or a 
> phone consultation is in Canada.
>
> This is not intended to be definitive but in general I am quoting $800 to 
> $2,800 for a dual country tax return.
>
> $800 would be one T4 slip one W2 slip one or two interest slips and you 
> lived in one country only - no self employment or rentals or capital 
> gains - you did not move into or out of the country in this year.
>
> $1,000 would be the same with one rental
>
> $1,200 would be the same with one business no rental
>
> $1,200 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.
>
> $1,500 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
>
> $1,600 would be for two people with income from two countries
>
> $2,800 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 $150.00 up.
>
> With a Rental for $350
>
> A Business for $350 - Rental and business likely $450
> 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 $800 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.
>
> Just a guideline not etched in stone.
> This from "ask an income trusts tax and immigration expert" from 
> www.centa.com <http://www.centa.com/> or www.jurock.com 
> <http://www.jurock.com/> or www.featureweb.com 
> <http://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) 216(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*
>
> /David Ingram expert income tax help and preparation of US Canada Mexico 
> non-resident and cross border returns with rental dividend wages 
> self-employed and royalty foreign tax credits family estate trust trusts 
> income tax convention treaty
>
> /
> New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia, 
> Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers, 
> Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay, 
> Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, 
> Moncton, Truro, Atlanta, Charleston, San Francisco, Los Angeles, San 
> Diego, Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, 
> Tulsa, Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, 
> Bellingham, Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, 
> Lawrence, Houston, Albany, Framingham, Cambridge, London, Paris, Prince 
> George, Prince Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The 
> Hague, Lisbon, Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort 
> Meyers,   Berlin, Hamburg,  Warsaw, Auckland, Wellington, Honolulu, Maui, 
> Kuwait, Molokai, Beijing, Shanghai, Tokyo, Manilla, Kent, Winnipeg, 
> Saskatoon, Regina, Red Deer, Olds, Medicine Hat, Lethbridge, Moose Jaw, 
> Brandon, Portage La Prairie, Davidson, Craik, Edmonton, Calgary, Victoria, 
> Vancouver, Burnaby, Surrey, Edinburgh, Dublin, Belfast, Glasgow, 
> Copenhagen, Oslo, Munich, Sydney, Nanaimo, Brisbane, Melbourne, Darwin, 
> Perth, Athens, Rome, Berne, Zurich, Kyoto, Nanking, Rio De Janeiro, 
> Brasilia, Colombo, Buenos Aries, Squamish, Churchill, Lima, Santiago, 
> Abbotsford, Cologne, Yorkshire, Hope, Penticton, Kelowna, Vernon, Fort 
> MacLeod, Deer Lodge, Springfield, St Louis, Centralia, Bradford, Stratford 
> on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St James, Red Deer, 
> Drumheller, Fortune, Red Bank, Marystown, Cape Spears, Truro, 
> Charlottetown, Summerside, Niagara Falls, income trust, Income Tax Treaty 
> Convention
>
> */international non-resident cross border income tax help estate family 
> trust assistance expert preparation & immigration consultant david ingram, 
> income trusts experts on rentals mutual funds RRSP RESP IRA 401(K) & 
> divorce preparer preparers consultants Income Tax Convention Treaty /*
> *//*
> Alaska,  Alabama,  Arkansas,  Arizona, California,  Colorado, Connecticut, 
> Delaware, District of Columbia,  Florida, Garland, Georgia,  Hawaii, 
> Idaho,  Illinois,  Indiana,  Iowa,  Kansas,  Kentucky, Louisiana,  Maine, 
> Maryland,  Massachusetts, Michigan, Minnesota, Mississippi,  Missouri, 
> Montana,  Nebraska,  Nevada, New Hampshire,  New Jersey, New Mexico, New 
> York, North Carolina, North Dakota,  Ohio,  Oklahoma,  Oregon, 
> Pennsylvania,  Rhode Island,  Rockwall, South Carolina, South Dakota, 
> Tennessee, Texas,  Utah, Vermont,  Virginia, West Virginia, Wisconsin, 
> Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, 
> Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, 
> Newfoundland, Yukon and Northwest and Nunavit Territories,  Mount Vernon, 
> Eumenclaw, Coos Bay and Dallas Houston Rockwall Garland, Texas  Taxman and 
> Tax Guru  and wizzard wizard - consultant - expert - advisor -advisors 
> consultants - gurus - Paris Prague Moscow Berlin Lima Rio de Janeiro, 
> Santaigo Zimbabwe Income Tax Treaty Convention
>
>
>
>
>
>
>
> -- 
> No virus found in this incoming message.
> Checked by AVG Free Edition. Version: 7.5.472 / Virus Database: 
> 269.8.15/848 - Release Date: 13/06/2007 12:50 PM
>
> 

Trackback

Trackback URL for this entry: http://www.centa.com/trackback.php/UsCaWeekofMon20070611003393.html

No trackback comments for this entry.

0 comments