David,
When I said renting out a regular condo, I meant renting it out to
vacationers by the week or weekend.
My family owns a regular home in Lake Tahoe and we have a management
company who will rent it out by the month, week or weekend to vacationers
and when they leave, come in and get it ready for the next vacationers to
rent it out. The actual rent that they recieve to rent it out 50% of the
time is about the same as it would be to rent it out 100% of the time to
renters who live there.
So, there would be no evicting of tenants in this scenario because these
people are there just short amounts of time.
But it sounds like from your answer like this is not done in Canada, unless
it is specifically a labeled "Hotel" condo.
I guess there must be special rules that disallow renting out condos for
weekends in a regular condo.
This is new to me and this is must be the cause of confusion here.
Of course I am just speculating here, maybe one can rent out a regular
condo on a short term basis like a week or weekend.
Thanks again for all of your time in helping me understand the rules up
there,
SXXXXXX
----------------------------------------------------
david ingram replies:
British Columbia has the most restrictive condo renting laws of all the 63
geo-political areas in the United States and Canada.
Unless the "building" has been designated for the purpose you suggest as in
an Apartment Hotel, the strata council can AND WILL pass a motion to stop
you from short term rentals.
As a matter of interest, I was part of the very first condo-motel unit set
up in Canada in 1972. It was called Adventures West and still exists as a
condo complex in Whistler but the owners voted to stop the hotel type
rentals years ago.
I do not suggest that you try and do this with any conventional unit in
Greater Vancouver and there is no apartment/hotel unit in Vancouver that I
would recommend to my worst enemy, let alone a friend.
I recommend a condo as an investment unit but suggest that you own it as an
investment and forget about personal use.
Call Christine Louw [email protected]
and get her to find you a nice condo. We will be glad to
help you with the tax returns.
Then, when you do decide to come up here to visit, you can spend diffeerent
weeks at: Whistler, Bucaneer Bay, Secret Cove, Victoria, April Point Lodge,
etc. Heck you can even rent a boat for a week, or get a motorhome from GO
WEST and tour the Rockies through Banff and Jasper. My favourite is a trip
by motorhome up the Alaska Highway to Homer and then Inuvik.
David Ingram" <[email protected]> on 05/28/2003 04:25:56 PM
Please respond to <[email protected]>
To: >
cc:
Subject: Renting out a Canadian Condominium by a US resident and citizen -
Part II
-----Original Message-----
From: ]
Sent: Wednesday, May 28, 2003 1:26 PM
To: [email protected]
Cc: Ross McDonald
Subject: Re: Renting out a Canadian Condominium by a US resident and
citizen
Thanks for your reply David,
Actually, we were thinking of buying a regular condo, not a hotel condo.
I don't know the advantages and disadvantages of having a hotel condo.
The reason I said we could use it for a week or so is simply that we enjoy
Vancouver and want to use it ourselves as well. If this was just for pure
speculation, then we would probably be inclined to just rent it out full
time to the same tenants. The US allows an owner to use their rental
property themselves for up to 13 or 14 (?) days per year and still write
off the interest and depreciate it.
My one big concern is buying in Vancouver is getting an honest, reliable
property management company. I have heard stories of dishonest agents
renting places for absentee owners and claiming they sat vacant, pocketing
the money themselves.
Do you know of an honest management company.
Also, what % range do management companies typically charge ?
I don't want to necessarily get the cheapest company, paying a premium for
someone who is very good, and very honest is well worth it.
Also, since you brought up "hotel apartment units", do you recommend these
?
Are these like timeshares ?
SXXXXXX
------------------
david ingram replies
I gave you the name and phone numbers of Ross McDonald and Betty Scott of
Lighthouse Realty in Abbotsford . They look after North Vancouver, West
Vancouver, Vancouver, etc., and also look after my wife's rental condo..
To quote from below:
Ross and Betty are LIGHTHOUSE REALTY which used to be CEN-TA LIGHTHOUSE
REALTY. They provide a superb property management service in Abbotsford,
North Van, Vancouver, etc. You can get Ross at [email protected]. His
phone number is (604) 855-7393
And you are correct the US rule is the greater of 14 days or 10% of the
rental days.
Therefore in practical terms, if you rent it out for 300 days, you can use
it for 30 days yourself and still use it as a deduction. If you only rent
it out for 100 days, you can use it for 14 days yourself.
In rereading what I wrote, I realize that I mixed up the editing.
However, I fail to see how you would use a regular condo for a week or two
yourself in any normal situation. The likelihood of a tenant moving out at
the time you want to use it are slim and none and it would be insane to
evict a tenant for you to use it for two weeks.
Better to have an unfurnished unit rented by the year and just come up and
stay in a hotel.
If you are not buying a hotel unit, don't even think about it.
david ingram - [email protected]
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US / CANADA REAL ESTATE SPECIALISTS
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
Be ALERT, the world needs more "lerts"
"David Ingram" <[email protected]> on 05/28/2003 12:02:28 PM
Please respond to <[email protected]>
To: cc: "Ross McDonald" <[email protected]>
Subject: Renting out a Canadian Condominium by a US resident and citizen
I have sent you a copy of another similar answer which went out two days
ago.
-----Original Message-----
From:]
Sent: Wednesday, May 28, 2003 9:23 AM
To: [email protected]
Subject: tax questions
To: [email protected]
cc:
Subject: tax questions
David,
I got your name from Christine Louw (North Shore Realtor at
[email protected]) and I wanted to ask you a few
questions.
My wife and I are US citizens, and we live in San Francisco. We want to buy
a condo in Vancouver, furnish it and rent it out. This way we can also use
it for a week or so a year ourselves. I've already found out about the
differences in the mortgage systems, but I want to know how the taxes on
the rental income would work. I plan to deduct the interest and depreciate
the property on my US tax returns.
1)I think I would have to claim the rental income and pay Canadian taxes on
that, correct ?
2)If so, will I have to also claim the income on my US taxes or do I just
claim that I paid the taxes up there ?
3)Do I have to pay twice on the same income ?
4)Also, if I am claiming income, can I depreciate the property on Canadian
taxes ?
5)What is the tax rate I would have to pay on the income with no deductions
and no other Canadian income ?
Let's say for instance that my property rented for $600 per week and was
rented out for 45 weeks of the year for a total of $27,000.
Can I deduct the cost of my management company and any repairs that may
have to be made ?
Any help you can give me in this area would be appreciated,
Thanks,
SXXXXXX
----------------------------------------------------
david ingram replies:
I presume from your question that you are talking about buying an apartment
hotel unit
to rent out rather than a straight condominium. I get this from your
comment about
using it for a week or so yourself.
The previous email I sent with the NR-6 Attached tells you about getting a
property manager, etc.., and having them sign as your agent with the CCRA
(Canada Customs and Revenue Agency).
Because this is a hotel unit as opposed to an annual rental, you will need
a GST (Goods and Services Tax) number as well and your agent will be
charging 7% GST on room rentals.
You would then prepare a Canadian return under Section 216(4) and report
your gross income on a T776 rental form which is analogous to a 1040
Schedule E.
>From the rent you would deduct accounting and legal, advertising, business
licence, repairs, strata fees, mortgage interest, utility bills, insurance,
etc.
If there was a profit you could also claim CCA (capital cost allowance -
like depreciation) of "up to" 4% on the diminishing balance of the worth of
the building (not the land).
When I say up to 4%, I am referring to the fact that Canada will not let
you claim depreciation past zero income. In other words, you cannot use
depreciation to create a paper loss on the property as opposed to the US
where you are presumed and even "must" take depreciation which creates a
loss which may or may not be used against other income.
Also, watch out on your US return. If you use the Vancouver Unit more than
30 days or 10 percent of the rental days (whichever is less), you may not
use the loss to offset other income.
Assuming that you make a profit in Canada, the tax on the first $30,000 or
so would be around 24%. After you had paid Canada, you would then report
the income again on your 1040 Schedule E and claim credit for the tax paid
to Canada on your 1040 Schedule 1116.
You can find more Canadian Rental information by going to www.centa.com
clicking on tax guide and then on the rental chapter which although written
20 years ago and not updated for 10 years is still relevant today.
We, of course can look after all of this for you, even to making your offer
for you. I am a licenced realtor.
For your mortgage, make sure that you deal with Joan Marsh at (604)
535-8891 - I guarantee that she understands cross border mortgage issues.
And for the benefit of the Chicago buyer of the condo in Abbotsford, My old
business partner Ross McDonald sent me the following:
Hi david,
Gee David, this letter writer sounds like they could benefit from a
property management referral to your old friends in Abbotsford - someone
who is familiar with NR6's and can send you the NR4's on time - what do you
think?
Ross & Betty
Ross and Betty are LIGHTHOUSE REALTY which used to be CEN-TA LIGHTHOUSE
REALTY. They provide a superb property management service in Abbotsford,
North Van, Vancouver, etc. You can get Ross at [email protected]. His
phone number is
(604) 855-7393
They will rent the condo, be the agent by signing the NR-6, AND give you an
excellent statement for the tax return. They can also prepare the Canadian
return although, of course, you should send it here so that we can check up
on them.
david ingram - [email protected]
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US / CANADA REAL ESTATE SPECIALISTS
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
Be ALERT, the world needs more "lerts"
.
---
Incoming mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.483 / Virus Database: 279 - Release Date: 5/19/03
---
Incoming mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.483 / Virus Database: 279 - Release Date: 5/19/03
---
Incoming mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.483 / Virus Database: 279 - Release Date: 5/19/03
---
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.483 / Virus Database: 279 - Release Date: 5/19/03
What's Related