How many years back can a refund be claimed for in ?

A Canadian who owns US property asks, In regards to the comment I have heard "You cannot fix up or collect rent on your property" can you please explain.Thank you

david ingram replies:

A Canadian can request a refund for TEN years.  An American only getsto go back three years.

QUESTION: A Canadian who owns US property asks, In regards to the comment I have heard "You cannot  fix up or collect rent on your property" can you please explain.Thank you
david ingram replies;

The answer is self-explanatory as you have stated it.

If a Canadian buys a rental property or inherits a rental property or abusiness in the USA, the Canadian can not do any repairs or fix-ups orimprovements or clean ups to the rental property or business.  TheCanadian can not collect rent or take in money at his or her business.

This older series of questions will give you more information.

I have had a dozen people arrested, deported and banned for doing minorjobs on their property.  I have only had two people arrested forcollecting rent on their Phoenix property.  I have had a dozen arrestedfined and deported after 3 to five days in jail for working in their USbusinesses without a visa. I know of hundreds.  Lately there has been alot of people deported from Mexico for running Bed and Breakfasts intheir places in San Miguel de Allende.  I have had an American arrestedat the Langley Airport  in BC for using a forklift to load something ona truck (without a working visa).

Do not forget to do the rental 1040NR tax returns as well.  Thepenalties for a non-resident's failing to file a US return to reportrental income is $1,000 to $10,000 PLUS 30% of the Gross Rent - Noexpenses allowed.  So if you were getting $1,000 a month for threeyears and failed to file your tax returns (even if you were losingmoney)  your cost would be a minimum of 30% of $36,000 plus $3,000penalty for failure to file.  It could just as easily be $1,000 for thefirst year, $5,000 for the second year and $10,000 for the third yearplus 30% of the rent.

These older questions will give you some more answers.


What is the best way to either structure a company (Canadian or USA)orset myself up personnel to shelter / minimize taxes paid as a Canadianresident, working in BC, investing in real estate in SanDiego,California, USA?

david ingram replies:

There is no one best way because everyone is different in terms ofestate, family, immigration and other issues.

In general I do NOT recommend buying in the name of a company.  If thedesire is to escape public liability, you do that with a good insurancepolicy.
Directors can be held liable for many, if not 'most'responsibilities of a limited company if the creditor or wronged personwants to pursue it. Think of the driver of a car belonging to a limitedcompany.  They sue the company AND the driver.
If you incorporate cross border, be prepared for anextra $2,000 a year in accounting plus legal fees plus extra statefiling fees.  California where you are thinking of investing,  has aminimum $800 a year government filing fee for an LLC as an example evenif you lost or lose money on the rental..

The following older Q & A may help.


We just purchased property in Spokane Washington( a 4 plex apartments)
We plan on renting out 3 of the units and keeping one.  I was told bythe border crossing inspector,
that I have to hire a rental agency in order to rent out the apartments.
and I also  have to have a property manger full time..
We will be at our apartment approx 2 times a month..
So we do not need a property manager.
Do you know if this true,, or please direct me to the correct personthat would be able to help me.
Thanks for your time.
david ingram replies:

You need a property manager if you do not want the strong possibilityof going to jail for a few days before being deported and then notallowed back in the USA. For a story about US Immigrations hell for aHoliday Inn Manager, try;_husband_fights_for_her_return.shtml
or how about a married woman's ordeal in Georgiafor a traffic violation  at

Crossing the border when you have an ad running to show the premisesand saying you are going down to spend the weekend in your holiday home(i.e lying to the HOMELAND Security official) could result in seizureof your vehicle and a ban for up to 10 years under their ER (ExpeditedRemoval) process.  In other words, it is more serious to lie to theguard at the border than it is to do the work.

You 'could' actually show the property for rent,  but you can NOT writeout a contract for rent or collect a single rent cheque (check) or cashfor rent in the United States. There is nothing new about this.  Thefirst time I ran into it was in 1972 or 1973.

If you are physically there, you can NOT cut the grass, shovel thesidewalk, paint or decorate or repair or fix or remodel or improve ortake out the garbage for any part of the rental property.

You can paint and clean your own unit if it is NEVER rented or intendedto be rented. You can not paint and clean up getting the property readyfor rent so DO NOT make the mistake of thinking you can live in one,clean it up and remodel it and then rent it out and do the same foranother one and then another one and another one. If you do this andone of your tenants (who maybe doesn't like you because you evictedthem or told them to turn their stereo down when you happen to be intown or for any other reason) read my website, (or the uscis website)he or she would find out that you can NOT do this stuff and could phonethe Homeland Security office or write an anonymous letter and you couldbe arrested in November 2008 for something you did in December 2007. 

This may seem unreal, but in US terms, working without a visa is justas serious in law as the spontaneous robbing of a convenience store andthe penalties can be worse.  Think of those nightly news shows with 28illegal Mexican or Guatemalan citizens being stuffed into Paddy wagonson the Arizona border. This is not a racist comment but with theMexican illegal immigrants, bing rounded up and shipped back across theborder is a way of life with no social stigma.  For a nice clean livingCanadian, being thrown into an immigration detention cell for takingmoney for rent is a devastating experience. In one case, a mother andher son were thrown into jail for 5 days in Phoenix when she went toPhoenix from White Rock BC.  Her husband owned 18 units and HAD aproperty manager.  Unfortunately, he also died in the arms of thatfemale property manager and his widow then fired the property managerand she and her 20 year old son went to Phoenix to collect the rent andhire another property manager.

The property manager (who knew the law as everyone in Arizona does)phoned Homeland Security who showed up and arrested mother and son andthrew them into the notorious Phoenix Immigration hell with some 300other illegals. To rub salt into the widow's wounds, the propertymanager ended up with the property because she was a second mortgageholder on the property and the property fell into default because ofthe widow's cash flow troubles, largely because she could not go toPhoenix to hire another property manager.

For instance, for 'you', this kind of arrest could result inimprisonment for a usual five days in a US immigration jail until youposted $5,000 bail each and then being banished from the US for five toten years. 

It does not stop there.  This type of conviction would stopyou getting on an airplane which stopped in the USA on the way toMexico.  AND,  under new US laws that have been proposedbut not yet actually put in place, the arrest and banning would stopyour Nov 6 trip to Cancun because people in this position will not evenbe allowed on commercial airliners that are flying over any part of theUS. To get to Cancun, you would have to fly from Calgary or Vancouverto London England and then back to Mexico City and 'then' to Cancun andreverse it to get home.

This may be overkill but 'You' are / were lucky that the inspector gaveyou the correct advice BEFORE you put your foot in it.

By the way, for income tax You ALSO HAVE TO FILE A 1040NR US TAX RETURNWITH A SCHEDULE E AND A SCHEDULE 4562  EACH.  Then the same income getsput on Schedule T776 of your Canadian return.  If you have paid tax tothe US, you will claim it as a credit on Canadian forms T2209 and T2036.

These older questions will help you AS WELL.

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 expenses 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 plate ended with 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 in the 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 piece 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 Ike on the 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



If a Canadian citizen purchases real property in the U.S. are theyrequired to have a U.S. Social Security Number?  Am I correct that mytax liability will be to the U.S., whilst reporting my income to theCRA but with offsetting foreign tax credits due to paying U.S. incometax?  For liability purposes, would it be more beneficial tax-wise tohold the U.S. properties under a Canadian or U.S. corporation?  Thankyou.


david ingram replies:

Assuming that you are going to rent the property out, you will need anITIN (Individual Taxpayer Identification Number).   Fill in a W-7 andsubmit it with your first tax return or try and get it at the bankwhere you get your mortgage. 

I do not suggest a corporation in either country unless you want tospend a couple of thousand dollars a year extra on accounting.  As aforeigner with a US corporation, you will need to fill in form 5472with your 1120 corporation tax return.  Then, because the mind andcontrol of the corporation is in the hands of a Canadian resident, youwill need to file again in Canada.

 This older Q & A may help

My wife and I are Canadian citizens and own a rental property (house) in Arizona. 
Do I need to file income tax in the USA? Can we deduct the mortgage interest 
and any expenses associated with the rental on our Canadian income tax return?Thanks and regards,______________________________________________david ingram repliesIf you do not file a US 1040NR with Schedule E and Arizona 140PY or 140NR return, you face the likely Federal penalties of a $1,000 to $10,000 fine each per year for failure to report rental income as a non-resident plus 30% of the gross rent with no expenses allowed.  That is for each of you if you both own the property.  And, I  have never seen a $10,000 penalty.Then, you will EACH be assessed 30% of the gross rent with no expenses allowed.(Canada's penalty of  just 25% of the gross rent with no expenses in reverse seems mild in comparison.)FILE the US returns for every year you have missed.THEN - There is NO responsibility for you to claim any rental expenses on your Canadian return.  You can claim them if you wish on form T776.  HOWEVER, you MUST report the gross rent on line 126 of your T1 if you do not claim expenses and the net rent if you do,.If there is a legitimate rental loss which has not been created by your using the unit personally, you can use the loss to reduce your other taxable income.A Warning.  There is ample evidence that the IRS and CRA are pro-actively sharing information about these.  And, if you are in a complex and using the unit personally NEVER talk about the fact you have not filed a US tax return and don't ask a local.  I personally know of two people who make their living turning in Canadians who are not filing their US returns.  There is a 10% to 30% reward for turning you in by filing US form 211. See it at - click on forms, etc.If you need help with this, you now know where we are.------QUESTION: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 T776You 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 California, 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 the depreciation and include it even if it creates a loss.  The good news is that the operating loss caries forward as a future deduction against 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 the US 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.---------_____________________________________________



My wife and I are looking at possibly purchasing a condo in PalmSprings for our retirement. We are both 50 years old and plan onworking for the next 7 or 8 years. Our plan is to purchase and use it afew times a year and rent/lease it out for the remainder of the yearuntil we reach retirement at which time we would spend 4 or 5 months ayears there. Looking for some advice on what we should be looking outfor and what would be a better choice mortgage wise, U.S. or Canadianfunding. Or is it a good idea at all to purchase U.S. real estate as aCanadian? Any advice or literature that's out there that you coulddirect us to would be greatly appreciated. Thanks!

xxxxx xxxxxxxx
david ingram replies:

If your intention is to start spending significant time there, buyingnow is extremely sensible because you are buying it at today's pricewhich will logically go up in the future.  You 'are' of course, alsodealing with exchange.

Since your earnings are in Canadian dollars, borrowing the money inCanada and paying cash in palm Springs means that you will be paying ina known currency.

To explain that statement, persons who bought in 1991 with a USmortgage payment of $1,000 needed $1,145.87 Canadian dollars to makethe payment.  By 2001, they needed $1,548.62 to stay even.

However, in reverse, if you bought in 2002, you needed 1,570.36 andonly need about $1,060 to stay even today.

Currency exchange does go both ways.

You might want to borrow half in Canada and take out a mortgage forhalf in Palm Springs.

If you are renting the property, you will both need to file a USFederal 1040NR with Schedule E and California 540NR return and thenchange the currency  to Canadian and file form T776 with your CanadianT1 returns.  Failure to file the form 1040NR can have penalties of$1,000 to $10,000 per year per return per person even if you losemoney.  A very real problem is that all sorts of Canadians approach aUS accountant and ask about filing and are told they do not need tofile a return because they are losing money.  Not so.  When it comestime to file, hunt down a specialist in dual country tax returns likeGary Gauvin in Dallas, Len Vandenberg in Kelowna, Steve Katz inVancouver,  Steve Peters in Halifax, Kevyn Nightingale in Toronto, BradHowland in Victoria or myself in Good Old North Vancouver.

Whatever you do, do NOT buy it in a corporate name. You will not saveanything and end up with another $2 or $3,000 of accounting fees.

You will also need to file personal US tax returns if you are theremore than an average  of 120 days a year. See the April 1994 newsletterin the top left hand box at


david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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My Home office is at:
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Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time -  (please do not fax orphone outside of those hours as this is a home office) expert  US Canada Canadian American Mexican Income Tax  service help.
pert  US CanadaCanadian American Mexican Income Tax  service and help.
David Ingramgives expert income tax service & immigration help to non-residentAmericans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual citizen - out ofcountry investments are all handled with competence & authority.
Phone consultationsare $450 for 15 minutes to 50 minutes (professional hour). Please notethat GST is added if product remains in Canada or is to be returned toCanada or a phone consultation is in Canada. ($472.50 with GST if inCanada) expert  US Canada Canadian American MexicanIncome Tax  service and help.
This is not intended to be definitivebut in general I am quoting $900 to $3,000 for a dual country taxreturn.

$900 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only (but werefiling both countries) - no self employment or rentals or capital gains- you did not move into or out of the country in this year.
$1,200 would be the same with onerental
$1,300 would be the same with onebusiness no rental
$1,300 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
$1,600 would be the minimum with arental or two in the country you do not live in or a rental and abusiness and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above andyou moved in and out of the country.
This is just a guideline for US /Canadian returns
We will stillprepare Canadian only(lives in Canada, no US connection period) with two or three slips andno capital gains, etc. for $200.00 up. However, ifyou have a stack of1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay anaverage of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 orT101 --- Income trusts with amounts in box 42 are an even largerproblem and will be more expensive. - i.e.20 information slips will beat least $350.00
With a Rental for $400, two or threerentals for $550 to $700 (i.e. $150 per rental) First year Rental -plus $250.
A Business for $400 - Rental andbusiness likely $550 to $700
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
Moving in or out of the country orpart year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for thefirst 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 - (maybeamalgamate a couple)
Capital gains *sales)  are likely$50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use theCanadian return as a guide for seven years at a time will be from $150to$600.00 per year depending upon numbers of bank accounts, RRSP's,existence of rental houses, self employment, etc. Note that thesereturns tend to be informational rather than taxable.  In fact, ifthere are children involved, we usually get refunds of $1,000 per childper year for 3 years.  We have done several catch-ups where the clienthas received as much as $6,000 back for an $1,800 bill and one recentlywith 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very timeconsuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge forinformation that comes in more than two files.  It can take us avaluable hour or more  to try and put together the file when someonesends 10 emails or 15 attachments, etc. We had one return with over 50faxes and emails for instance. 

This is aguideline not etched in stone.  If you doyour own TDF-90 forms, it is to your advantage. However, if we put themin the first year, the computer carries them forward beautifully.