US citizen buying rental property in Montreal - NR6 and

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As a US citizen, if I put out to rent an apartment that I own in =
Montreal do I have any obligation to file an NR6 or to withold taxes =
from the rent? Do I have any obligation to advise my tenant to withold =
taxes? If I do neither, will I incur any penalty when I file my annual =
tax return in Canada reflecting my small gain/loss on the proerty?
david ingram replies:
It is your responsibility to arrange for an agent although I did a =
return for a fellow from LA this week.  He has owned a rental in North =
Vancouver for some 22 years without ever having filed an NR-6.  The CRA =
has slipped in not getting on top of it.
If you file your section 216(4) return on time you will be allowed to =
deduct the expenses.  If you are more than two years late, Canada will =
tax you on the gross at 25% and not allow you any deductions (In the =
same situation in the US, the penalty is 30% of the gross with no =
I am going to reproduce another Montreal question I had a few months =
QUESTION: We understand that there is a 25% tax on=20
gross rent from investment properties=20
owned by non-canadians who have not=20
filed their proper forms.  We were=20
ignorant and knew not of what we were=20
doing when we bought our rental=20
property... which runs at a loss.  In=20
Montreal the bienvenue tax is over six-
thousand dollars (this is the tax all new=20
home-owners must pay in Montreal). =20
Can we deduct this as a tax item on our=20
federal return this year?  Next year we will=20
have to be sure to fill out all the proper=20
paperwork.... Thanks for your response.
david ingram replies
The 25% tax is a withholding tax, not a tax if you get the proper return =
in within 24 months.  You will have to pay the 25% first, but if we file =
a return under Section 216(4) with the proper whining letter, you will =
get it back if you actually lost money in the rental. In fact, the 2003 =
216(4) return is not actually due until June 30, 2004 so we do not even =
need a whining letter if you get it (the financial figures) here in the =
next ten days.
I would be happy to look after this for you because it is a sort of =
specialty.  All together, we lkikely prepare over 200 non-resident tax =
returns for Canadians with US property or Americans with Canadian =
Property.  Throw in a couple of Germans, a couple of Australians, a =
Spaniard, Italian, Swede and New Zealanders and even an Antartica worker =
and you can see that doing it by mail is simple.  An advantage of our =
doing it is that we can also prepare the US andState return with the =
proper tax credits and you do not need to try an train a local =
accountant.  (It can take 20 to 30 hours to figure it out the first =
And, if you have a local accountant that you really want to use, we =
prepare a dummy US return with all the proper figures in the right place =
so that your accountant can just plug in the figures without having to =
work at it.
Let me know if I can help.
The Bienvenue Tax is considered a capital addition to the cost of the =
building.  We have a PPT (property purchase tax) in BC with the same =
Answers to this and other similar  questions can be obtained free on Air =
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US/Canada/Mexico Tax Immigration & working Visa Specialists
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4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
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[email protected]
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