My question is: Canadian-specific
QUESTION: I purchased an apartment about four years ago.I lived
there for one year and I have been renting it out since then.when
I bought it my father had to co-sign for the morg. and became one
per cent owner.I have been claiming all the rental income on my
name.there has been no money exchange between us, my father i
guess was just an insurance for the bank.My question is I have
gotten my fathers name taken of the morg. and land tittle so now
I'am now 100 per cent owner.Now do we both pay capital gain how
is it calculated and is there any other tax we have to pay?I
payed $126,000 it was assesed at $165,000.
-----------------------------------------------------------------
----------
david ingram replies:
As described, your father has no position, He was merely there
for banking purposes and he held it in trust for you.
If you are selling now, there should be no capital gains tax for
you either. You are allowed to rent out a personal residence for
up to 4 years if you file a declaration under 45(2) of the tax
act.
The following question will help you a bit more and give you the
forms to fall out.
.net]
Sent: Monday, August 15, 2005 4:20 PM
To: taxman at centa.com
Subject: tax exemption from sale of property
Hello Mr. David Ingram,
I am a mortgage broker with XXXXXXXXXX Financial. I recently
came across an email where you explained how a principal
residence could be rented and then sold without being subject to
capital gains taxes.
“
a person is allowed to rent his or her principal residence out
for up to four years without paying tax and for any length of
time if the rental is because they were transferred out of the
city
”
If someone purchased a house and lived in it for more than a
year, then moved out and rented out the house, are they exempt
from capital gains if they sell that house within 4 years from
the rental start date?
Also, can they claim that their rental property is their
principal residence when they have already purchased and are
living in another house?
Also, I would like to meet with you to discuss the Smith
Manoeuvre. I have spoken with a few lenders about the Smith
Manoeuvre but they said they only provide the platform for
someone to set up this tax strategy. I would like to talk with
you about the details of this tax savings strategy if you have
time.
Thank you,
XXXXXXXXXXXXXXXXX
----------------------------------------------
david ingram replies:
The answer is as stated with the proviso that the house must have
been purchased as a principal residence. Merely living in it
does NOT make it a principal residence although for all practical
purposes it does because unless they get a tip the CRA rarely
ever looks at a house sale.
But if your fellow moved into the house and fixed it up to get it
ready to rent and was living there as a convenience rather than
his "principal" residence, it would not be tax free.
To do the calculation, you must prepare form T2091 available at
the CRA website or click here:
http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind/t2091-ind-04e.pdf
the T2091 worksheet is at
http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind_-ws/t2091-ind-ws-04e.
pdf
In addition, with the first rental return, the person must make
the following election:
I hereby designate the residence at XXXX any street, to be my
principal residence even though I do not ordinarily inhabit it
under section 45(2) of the income tax act.
In the past, the CRA would usually accept a late election but
after thirty-four years (the law was passed June 17, 1971) the
CRA figures that people should get it right. Strangely enough
though, very few accountants seem to know about it and I have
NEVER had a client bring in the election prepared by another
accountant. For years we had it printed on our proprietary
software so that it was there automatically and a subject of
conversation, if not actually used.
However, if I move out of my former principal residence and move
into another house I own whether for the four year period in the
same area or any length of time if I get transferred, I can only
claim one or the other as my principal residence for tax purposes
so if I claim the one in Vancouver, i have o pay tax for the same
time period on the one in Toronto or Halifax.
Obviously, one claims the one that went up the most.
If you go to www.centa.com and read the November 2001
b=newsletter, you will have the original document about making
mortgage interest deductible in Canada. It was originally
published in the North Shore News in November 1976 and has been
updated every four or five years since and is due for a new
update soon.
If you would like a free look, you can come out to one of the
Thursday night seminars at Fred Snyder's Dundee Wealth Management
office. I will not be there for the next two or three weeks as I
am taking my first vacation of more than a day in 34 months
(seriously). I should be back in the saddle as they say by Sept
9th or so because I have an exam to write for UBC on September
8th.
Every Thursday Evening, Fred Snyder of Dundee Wealth Management
conducts one of 17 different financial seminars at his office
Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of burrard)
Phone (604) 731-8900 to register
No cost - no obligation
Topics always cover David Ingram's mortgage interest as a
deduction presentation
other topics - getting the mortgage, estate planning, critical
care insurance, income taxation, differences between stocks and
bonds, and usually the most innovative HELOC mortgage offered in
Canada from Manulife Bank presented by Stuart Rodger
------------------------------------------
Answers to this and other similar questions can be obtained free
on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am
a permanent guest on Fred Snyder of Dundee Wealth Managers' 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
Call (604) 280-0600 to have your question answered. BC listeners
can also call 1-866-778-0600.
Callers to the show and questioners on this board can also attend
the Thursday Night seminars on finance and making your Canadian
Mortgage Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax
or phone outside of those hours as this is a home office)
email to taxman at centa.com
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 and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or
business affairs such as at www.centa.com. If you forward this
message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from
www.centa.com or www.jurock.com or www.featureweb.com. David
Ingram deals on a daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems
for the United States, Canada, Mexico, Great Britain, the United
Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,
China, New Zealand, France, Germany, Spain, Italy, Russia,
Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland,
Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India,
Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands,
US, UK, GB, and any of the 43 states with state tax returns, etc.
Rockwall, Dallas, San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and
Immigration Tips, Income Tax and Immigration Wizard Income Tax
and Immigration Guru Income Tax and Immigration Consultant Income
Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR
6 Non-Resident Real Estate tax specialist expert preparer
consultant expatriate anti money laundering money seasoning
FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border
transactions
Alaska, Alabama, Arkansas, Arizona,
California, Colorado, Connecticut,
Delaware, District of Columbia, Florida,
Garland, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey,
New Mexico, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon.
Pennsylvania, Rhode Island, Rockwall,
South Carolina, South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavit Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas Taxman and Tax Guru and wizzard
wizard - consultant - expert - advisor -advisors consultants -
gurus - Paris Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo
New York, Boston, Sacramento, Minneapolis, Salem, Wheeling,
Philadelphia,
Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples,
Fort Myers,
Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson,
Green Bay,
Minot, Portland, Seattle, St John, St John's, Fredericton,
Quebec, Moncton,
Truro, Atlanta, Charleston, San Francisco, Los Angeles, San
Diego,
Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun
City, Tulsa,
Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello,
Bellingham,
Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City,
Lawrence,
Houston, Albany, Framingham, Cambridge, London, Paris, Prince
George, Prince
Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague,
Lisbon,
Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers,
Berlin,
Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai,
Beijing,
Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red
Deer, Olds,
Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie,
Davidson,
Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey,
Edinburgh,
Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney,
Nanaimo,
Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich,
Kyoto,
Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries,
Squamish,
Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope,
Penticton,
Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis,
Centralia,
Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson,
Fort St
James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape
Spears,
Truro, Charlottetown, Summerside, Niagara Falls, Albany STAR WARS
international non-resident cross border income tax expert
preparation & immigration consultant david ingram, experts on
rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer
preparers consultants
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20051214/64879dbd/attachment.htm
Comments (0)
CEN-TA Cross Border Services - Tax, Visas, Immigration
http://www.centa.com/article.php/UsCaWeekofMon20051212002240.html