Good morning My wife and I are considering purchasing a rental income condo in xxxxxx,Florida (strong Canadian dollar/weak Florida real estate market) We live in xxxxxxxx,Ontario and in approx. 8 years we plan to retire and winter in Florida. I am a Canadian citizen and my wife is a Canadian landed immigrant/U.S. citizen. We have made arrangements to purchase by borrowing against our home which is now paid for. Both of us work,my gross income approx. $75,000.00 my wife's approx. $50,000.00 . We have no debts although we do not have a company retirement plan and as such are heavilly investing in RRSP's (approx. $2,800.00 My questions are   - is their an advantage to put the purchase in my Wife's name as she is a U.S. citizen? - should we arrange for the morgage in the U.S. vs Canada - deal with currencey fluctuation vs deduct morgage interest from my wife's income? - do you have representation in our area - xxxxxxxxxxx,Ontario?   Any comments/advise you could provide would be very much appreciated.   Thank You  
david ingram replies:

First, your wife should take out her Canadian Citizenship.  There are NO disadvantages other than the paperwork and cost.

If you had done this three years ago, you would have wished that you had borrowed the money in the US.  The decline in the dollar means that you would be paying back 65 or less percent of what you had borrowed.

I am one of the people who thinks that we could see a 1.10 Canadian dollar which means that you should still borrow in the US and pay it back in smaller dollars as the Canadian dollar rises to $1.10 to $1.20 US.  Remember, there used to be $5.00 Caandian dollars to one British Pound Sterling and now it is about $2.25.

The problem is that if you have the mortgage in Canada and are trying to pay it with a lower US dollar, you will be subsidizing more than you think. The only way to guard agains the currency fluctuation is to borrow half in the US and the rest in Canada.  If you borrow enough in the US that the rent covers the mortgage paymnet, then you will have enough US dollars to pay the money that goes across the border.  Whatever is left you can pay in Canda with Canadian dollars. 

Think back to 1991 when you needed $1.14 to buy one American dollar.  It went straight up to where you needed $1.64 for one US dollar and today it is back to $1.05  or so. 
I hope that your wife has been filing her US tax returns with TDF-90 and 8891 forms to report her Canadian RRSP and any other financial accounts to avoind mimum penalties of $10,000 plus 35% of the money in the RRSP plus 5% for every year not reported.  You can find more information at  


If she has not been filing her US returns, get them done NOW.  Your buying property has brought her back into the US IRS firing range radar.  We, of course would be happy to look after them for her.  She needs to do the current year (2006) plus the six preceeding years.

As far as who should own the property, it does not matter much as far as I am concerned.  If you are living in Florida at the time of sale, the tax will be identical. If you are living in Canada, there may be a small difference, but the rules can change a dozen times in the interim.  Tell me what day you both intend to die and the order and I could only 'maybe' give a beter ansdwer because of changing laws.

For estate and other purposes, having it in joint tenancy with right of survivorship is likely as good as you will get. If you put it all in your wife's name and she goes first, it will be even more complicated.  And I am feeling very mortal right now with 3 good friends (two younger) gone in the last three weeks.

Howver, it is anyone's guess what will happen in the future.  As I said before, the logical method of protecting yourself against too wild a fluctuation is to borrow half in the US and half in Canada.

The following older question answers the US rental question if you were both Canadians.  B ecause your wife is an American, you can file an1040NR and she can just include her half of the rental on her 1040 but you also have the right to file a joint 1040 return with her.

Subject:        US Condo and Rental Expenses
Expert: [email protected]
Date: Saturday March 03, 2007
Time: 02:22 PM -0500


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.

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 Califormnia, a 540NR.

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 thedepreciation and include it even if it creates a loss.  The good news is that the operating loss caries forward as a future deduction agaisnt 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 theUS 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. �