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My question is: Applicable to both US and Canada
QUESTION: I tried asking this question on your website but did not get a response, so I am trying again here.
I wish to purchase a condo in Hawaii. I am a Canadian citizen. What are the implications when I do decide to rent it out? Can I write of rental expenses?
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david ingram replies:
You will have to register in Hawaii for GET which is the General Excise Tax.
Many if not most Canadians fail to do this and get a rude awakening when the Hawaii state catches up to you and you end up paying about 12% GET on the rentals you made to Canadians because you advertised it in Canada and collected the money in Canada and never thought about the GET.
GET is collected on the Gross for all rentals at: Hawaii General Excise Tax of 4.166% & Hawaii Hotel Tax of 7.25% will be added.
One West Vancouver lady I know received a total Retroactive GET bill of some $38,000 when no money had ever changed hands in Hawaii.
Then You have to file a N15 Hawaii Income Tax return and a Federal 1040NR tax return with a schedule E to report the rental income.
Standard rental expenses are deductible and without limiting them would include accounting, advertising, cleaning, repairs, maintenance, condo fees, telephone, heat and air conditioning and light, mortgage interest, management fees, rental agent fees, etc.
You would then convert the figures to Canadian Dollars and report the same income again on a Canadian Schedule T776. If you had paid tax to the US and Hawaii, you would claim a foreign tax credit on Schedule 1 federally and the relative provincial form.
Incidently, If you are interested, Fred Snyder and I will be starting a new weekly open line financial show on 600AM at 9 AM on February 1, 2004.
It is supposed to be live on the internet at www.600am.com . This is the same station that Rafe Mair is hanging his hat at now.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
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North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
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www.centa.com 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 & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
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David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
(604) 980-0321 - Fax 913-9123 [email protected]
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