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QUESTION:
Hi,
I am looking to invest and buy a rental property (single family home, duplex
or four plex) in Canada?
1) How do I report the rental income in my US income tax return?
2) What types of taxes would I have to pay to the Canadian government?
3) If I sold the property, how do I report the gain and do I pay tax on
this?
Thank you,
CXXXXXXXX
============================================
david ingram replies:
You need a realtor who understands non-resident buyers. If you are looking in Vancouver, we can help you with in-house realtors and outside people as well. You might want to look at www.ChristineLouw.com. Christine is very knowledgeable when it comes to dealing with out of country buyers and Wendy Cook in our office at (604) 980-0321 is also very knowledgeable.
After purchase you need a Canadian Agent to sign a Canadian Form NR-6 (before the first day of rent) which agrees to remit non-resident withholding tax to the Canadian Government and then the agent will have to file NR4 forms to report the rent and tax deducted by March 31st of the next year.
You will then file a Canadian tax return with a Schedule T776 to report the rental income on a Canadian T! filed under Section 216(4) of the Canadian Income Tax Act.
Then we convert the Canadian income tax figures to US dollars and enter them on a US schedule E. The Schedule E forms part of your US 1040 and if you had to pay tax to Canada, you have to claim the Canadian Tax on US form 1116.
By now, you have torn half your hair out, thrown your arms in the air and called our office to do it for you.
Answers to this and other similar questions can be obtained free on Air every Sunday morning.
Starting this Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners 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
David Ingram's US/Canada Services
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