Rental House might have been in company name and now a personal residence. - International non-resident cross border expert inco
Hi,..My question is:
I had a sales business in BC for many years.....in 1999 I
bought a rental house in Alberta that my accountant put into my company...even
though everything to do with the house is in my personal name....line of credit,
etc....I quit working for the company that I was sales rep for in
2004.....hence, I moved from BC into my rental house in Alberta in June of
2005.....My company only has a shareholder loan due to me and this rental
property which I am currently living in .....I want to close my company....This
rental house has become my personal residence as of June 2005.....Can you please
advise as to the procedure for closing my company & the removal of this
rental house from the company books to my personal residence as of June 2005
& can this be done retroactive?
Your help is appreciated.
Thank
you.
-------------------------------------------------david ingram replies:
This is a very late reply and was picked randomly out of about 700 unanswered emails.
Your question points out one of the best reasons to "not" put a house into a corporation.
It seems to me that the house was not in the company from your question. The compny may have been handling the paperwork for the rental; but your accountant could not put a house you bought into the company. The lawyer or notary would have registered it in the comapny name in the first place. If you bought it with a line of credit in your name and it was registered in your name, than it is likely yours already and the error was putting any of the rentals through the company.
It could also be that the company was holding it for you.
A lot depends upon whether you have already filed the corporate 2005 and 2006 tax returns. If you have not, you should investigate the possibility that the house was not in the company name OR if it was, maybe the company was only holding it in trust for you.
The other problem is that when you moved into the rental house in 2005, you triggered a capital gain if it was in your name. If it was in your name and you never claimed CCA (depreciation) you could have filed an election under Sectin 45(3) to delay paying the tax on the capital gain from the price you paid for it and the deemed sale when you moved in. Technically, you are too late to file that election. However, the CRA has been known to acept a late filed exemption form.
If you did claim CCA, and it was in your name, you owe tax on the recaptured CCA and the capital gains with your 2005 tax return.
If it 'was' in the company name, you owe tax on the personal benefit bestowed on you by the company since you moved in.
----------------------------
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This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only - no self employment or rentals
or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts 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
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