I'm a past client with a question.

I consulted with you two years ago about building a house in Hawaii.
The house is complete and we want to sell (largely because of the four months we can stay without paying U.S. income taxes).
In Calculating the taxable income from the sale of the house, I need to know what items are deductible, obviously materials and subcontractors are, but what about utilities during construction, use of vehicle to haul materials, bank charges, etc. etc.
Also what format should the records be in for you to do the tax return. Spread sheet, Quickens, etc.
xxxx xxxxx
david ingram replies

You do not need to pay US taxes until or unless you have stayed more than 183 days in one year or by staying more than 4 months and a couple of days for three years in a row you have met what is called the substantial presence test and made yourself have to file a return.

Even then, if you have still kept your main ties in Canada as evidenced by form 8840
you are still only taxable in Canada unless you have specific US income. 

However, you can NOT use form 8840 if you are in the US more than 183 days in the current year.

And, you do not want to be in the US for more than 183 days because you have to be in BC (not just Canada, in BC) for 183 nights to qualify for BC medical.  5 months in Hawaii, two months in Ontario and 5 months in BC would cancel your BC medical.

Virtually anything you spent building should be deductible.  To get an idea, look at US schedule C for the information I would need.   I would not fill in this form because that would mean tax at full rates rather than capital gains rates but I would use that information to establish a capital gain.

I prefer an electronic spread sheet such as excel over any computerized accounting program you can find.

Hawaii's market has not fallen as much as the rest of the US but their foreclosure rate jumped to # 20 in September from #34 in August. In my opinion, it is going to get worse, not better.  No one is talking to me about buying in Hawaii right now.

You might consider keeping it and renting it instead of selling.

Whether you sell or rent you will be filling out a 1040NR and a Hawaii State return each.

This was spammed out --- As a past client, you would usually get a preference - Put your Name and Paying Customer in the subject line - nothing else. Although if 50 past people write in one day, only a couple get answered.


david ingram's US / Canada Services
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IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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 for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com or www.garygauvin.com.  If you forward this message, this disclaimer must be included."

 -You can find a sample 1040NR tax question about selling real estate and

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