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I had assumed I'll be filing tax returns for the US and Canada for the 2 years. I'd anticipate around 30k/year income from moonlighting in the US, and 60k/yr canadian income.
If I had 24k/year canadian mortgage interest, couldn't that be deducted against my US income?
Will you be able to do both my US and Canadian taxes when I'm set up there?
thanks!
HXXXXXXXX.
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david ingram replies
Sure you can use it against the US income but the whole US income plus the Canadian income will still be taxable in Canada at a much higher rate than your US rate (no joint tax return in Canada) so the deduction is not worth anything to you.
However, if you have anough assets to pay cash for a place in Ontario, you could sell all the assets (mutual funds, etc) and pay cash for the house in Canada. "THEN" use the Canadian house as security to borrow money to buy back the Mutual funds.
"Then" the interest is deductible in both countries.
At those income levels, you should buy an hour of my time with a phone consult ($350 / hourCdn funds).
And, of course, I would be pleased to look after your US / Canadian tax returns.
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----Original Message Follows
Subject: Is mortgage interest paid in Canada deductible against US income?
Hi David, I'm going to work on a master's degree in Toronto starting this Fall for 2 years. I'll be working in the US part time each year for extra income. If I buy a house in Toronto, may I deduct the mortgage interest off my US income? I realize that it's not deductible in Canada. This will help me to decide whether to buy a house or to rent.
Thanks!
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david ingram replies: You can write off the interest on your US return but it will not do you any good on your Canadian return so is not of any use to you.
I think you should rent if you are only there for two years. PS: I actually bought over 600 properties in Ontario in the 80's and had a major presence there.
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