Loaning money to parents for retirement home - Fred Snyder Seminars - international non-resident cross border expert income


My question is: Canadian-specific

QUESTION: My parents are looking at purchasing in the Okanagan.
They have a condo paid for in Abbotsford worth
approximately 220 000.     What they would like in the
Okanagan is out of their price range, and they don't want
to assume more debt..

I own a house in Abbotsford, worth approx. 440,000 with
300k in equity..


If I took an equity line to help them purchase their new
property could I make the interest and equity payments
tax deductible,  eg...100,000 equity loan at 550$ a
month/6k per year in payments..  Roughly what percent
could I expect as a tax return, I make 74 000 a year..?

Does this sound like a feasible option which would
accomodate their needs and allow them to purchase a
freehold property rather than a modular home....I think
this would help keep their equity and act as an investment
vehicle for me upon sale.. Am I correct....

Thanks...

 
----------------------------------------------------------------------------------
david ingram replies:

An admirable deed but not tax deductible.

Interest on a capital asset, (vacant land, gold, non-dividend bearing stock, a summer cottage, your parent's house, etc. is NOT deductible on a year to year basis although it can sometimes be added to the ACB (adjusted Cost Base) of the asset for capital gains purposes. (not always - just sometimes - NEVER for gold, silver, summer cabin, etc - sometimes for vacant land).

If you had other investments like a mutual fund, etc, you could cash in the mutual fund, pay for the property in the Okanagan and then borrow money on your house to buy back the mutual fund and the interest would be deductible but interest on an investment in your parent's house just does not make it.

Goto
www.centa.com and read the November 2001 newsletter in the top left hand corner for more info.  Buying and reading Fraser Smith's book, the Smith Manouvre wouold also help you understand the process.

Fred Snyder - host of  'ITS YOUR MONEY' every Sunday from 9:00 AM to 10:30 AM on CHBD 600AM also gives free seminars at noon and 7 PM at his Vancouver office at `1764 West 7th'.  Call (604) 731-8900 to reserve a seat,.
 
 
If you want a free answer for a couple of minutes, remember
 
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
 
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee wealth Management
and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS
YOUR MONEY"
 
Those outside of the Lower Mainland will be able to listen on the internet
at
 
www.600AM.com
 
Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600.
 
Old shows are archived at the site.
 
Note - I am only on the last Sunday of the month now.
------------------------------------------
David Ingram 
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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. If you forward this message, this disclaimer must be included."
 
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 is to be returned to 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 or www.jurock.com or 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

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