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QUESTION:
HI--
I am a US citizen living and working in the US. I am considering =
purchasing a rental property in Vancouver, BC and wondered about the tax =
consequences--both in Canada and the US. Would I need to pay taxes on =
the income in Canada or US? =20
Both - Canada first on a Section 216 return with an extra schedule T776 =
- If any taxes were paid to Canada, you would claim a credit on your US =
return by way7 of form 1116. After convewrting the Canadian figures to =
US $$$, youy would have a small loss, not a profit.
Would I be able to deduct mortgage payments and condo fees and =
management company fees as a business expense?=20
You can deduct "mortgage INTEREST" and condo fees and management fees in =
Canada and the US.
If it was to be paid in Canada, would I only be taxed on the rental =
income--not my personal US salary income. =20
Canada would not have a claim on your US income unless you were in =
canada very ofteen on a continuos basis.
Thank you!
KXXXXXXXXXXXXXXx
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david ingram replies:
Before you rent it out, you need to fill out form NR-6 and have a =
Canadian "Tax agent" who may or not be the rental agent.
The NR-6 is available at:
http://www.ccra-adrc.gc.ca/E/pbg/tf/nr6/nr6-00e.pdf
This will result in the tax agent having to remit $25% of the net rent =
to the Canadian Income Tax Department every month.
Then by March 31st of the following year, your tax agent has to file =
form NR-4 and Summary to report the rental income to the CRA and you.
The flat form is at:
http://www.cra-arc.gc.ca/E/pbg/tf/nr4_flat/nr4flat-03b.pdf
The summary form is at=20
http://www.cra-arc.gc.ca/E/pbg/tf/nr4sum/nr4sum-fill-00b.pdf
Then by June 30th, you have to file a Canadian Tax return under Section =
216(4) to report the rental income to Canada on form T776
http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-fill-01e.pdf
You can read the T-1 Guide at =
http://www.cra-arc.gc.ca/E/pub/tg/5000-g/5000-g-03e.pdf
The T776 will give you a good idea of what is deductible -- It is =
analogous to the US form 1040 with a schedule E.
You can also go to www.centa.com and read the rental income seciton in =
the Tax Guide - look around a bit.
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David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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US/Canada/Mexico Tax Immigration & working Visa Specialists
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North Vancouver, BC, CANADA, V7N 3L7
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Disclaimer: This question has been answered without detailed =
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