Buying US vacant land - John McKilligan

Hi David,
I've worked with John Mckilligan as his client since 1991 when there was Centa Realty!  So technically, you had my listing in West Van.  John suggested I ask you a question (and say "Hello").  Am thinking about paying cash for a piece of land in the United States.  No mortgage, no rental income, few if any visits to the property...what happens?  More specifically - do I pay purchase tax?  do i pay a sales tax/capital gains in a few years when it sells?
david ingtram replies:

Every Province in Caanda has different real estate laws.

BC and Ontario have a  propery purchase tax.

BC restricts rentals in strata title buildings

PEI has a non-resident restriction on ownership as does Australia.

Every state in the US has different laws with Vermont and Californis (as an example) having an alternative minimum tax on Real Estate profits.

Florida, Washington, Alaska, Nevada, Texas, Wyoming have no personal state return while Tennessee only taxes interest and dividends and New hampshire only taxes self-employed business profits.

The rest and the federal government all tax real estate profits and capital gains.

And the above answer is always subject to change,.  When i started in this busienss only about 17 states had income tax and new 43 do.

I do not know of any property purchase taxes in the US but I am sure at least one jurisdiction will have one.

If you want to install a cuilvert, etc, yourself to gain access or drain it and it is a recreational site for you to go and park your motorhome on for weekends, you can do that.

If the intent is to hold for future commercial resale, you can NOT even cut down a tree or install a number on the fence (if there is already a fence since you cannot build a fence wither).

.This older question about doing something to a building, etc, will also help. -------------------------------------------------------
QUESTION: Hello David,

I'm living in Vancouver, finally paid off the student debt but
don't see myself getting into
the expensive Vancouver market. I do however like to ski and was thinking of buying an
inexpensive trailer (25k Cdn) in Maple Falls Washington.
However I'm not sure what other expensives I should expect given that it's in the US.
I'm not trying to make this an investment with a high return, but I would like to do some
handy work to it to increase the value. If I add about 10k worth of value, how would that
affect my taxes in the long term?

Thanks for the advice.
david ingram replies:

One of my favourite weekends ever was in 1973 at the Chandelier (think it has a different
name now) when marooned at SnowLine  because of the gas shortage when
one could only buy gas on odd days if your licence pklatre ende dwith
an odd number and even days when it was an even number.

Strangely, it was that weekend 34 years ago that lets me answer you
question now.

The cabin I was staying in was not a rental but was built by the fellow
who owned it.  When he was building it, buddies would come down and help
him and one weekend, the INS raided the spot and deported a bunch of
his friends for working in the US .

He was fine building it because he owned it but no one else can hammer
a nail, paint a board, install a sink, or carry a shingle if they
are not either an owner or a legal US citizen or US resident with a
green card.

If your buddy is working and living inthe US with a TN, H1, O1, P1,
L1 or any other visa but a green card, they cam NOT help you either.

And, if you are intending to rent the trailer out 'EVER', 'you' can
NOT hammer a nail, sweep the front steps or clean the toilet.

Assuming you are buying this trailer on its own lot, when you go to
sell, you will owe the US income tax on the profit.

If it is your only pioece of real estate at that time, you will not
owe Canada any tax because you can claim it as your personal residence
if you have not bought another place.
However, I would far prefer that you stretched your resources to buy
something in Canada to live in and combine your present rent and the
payments you would have to make for the trailer to buy your home in
Canada. If you can't afford a one bedroom, buy a studio.  Go down to
Ikea on teh Lougheed highway and look at how much they can put into a
small space. 

Interestingly, I read the other day that Ikea has now sold enough
furniture in North america that 10% of all children are conceived
in an Ikea Bed.  Now that is information worth knowing.

Good luck