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QUESTION:
I'm a Canadian citizen and am thinking of purchasing a piece of
property in Washington State.
What are the tax implications when the property is sold in the
future?
Does the US government take a with holding tax when sold?
Are there any differences in purchasing raw land or a home?
Can I deduct mortgage interest if it is an investment?
Are there any pitfalls or things to be aware of?
I have used your services twice in the past so will be looking
forward to your reply.
Thanks, R XXXXXX
=============================
david ingram replies:
If you asked me, I could write a book!
1. If you buy a piece of property in the USA, there is a
minimum tax of 15% on the sale of the property after May 5, 2003
and 20% before that.
That is a big drop from the 26% from 1995 to 2002 when it dropped
to 20% during the year. I owe the 15% change to Roy Lentz a CPA
in Washington State (360) 734-2172. One of his tax returns
appeared across my desk and I phoned him and got the lowdown.
2. The tax is the same on raw land or a house.
3. Interest is another matter. In general, you would
capitalize interest on vacant land.
Interest for a summer home or a ski cabin would be deductible
on an annual basis for a US tax return but not a Canadian return
unless you let us re-arrange everything. ( I will be talking
about how to do this at the Cartier Offices at 1764 West 7th in
Vancouver at 7 PM. Free - Call (604) 731-8900 to register -
limit 10 people) Tell them you are coming from this newsletter.
If it is a rental property, you can deduct the interest on an
annual basis along with taxes, repairs, utilities, etc.
(Schedule E on your US return and T776 on your Canadian return).
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed
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