thank you for your quick reply- after posing the question and before I got your reply I stumbled onto
the " new gst rebate for new residential " see links
-----
http://www.notaries.bc.ca/article.php3?245
http://www.canoe.ca/HGHomesSilverstein/010824_newcondo.html
which seems to indicate that there is a rebate for landlords...any comment ?
thanks
XXXX
=================================
david ingram replies:
Not really, every purchaser of a new condo gets a partial or full rebate. Commercial landlords get it all back and residential landlords or owner occupiers get a partial rebate.
I assumed you were upset about the amount you were leaving behind. Your realtor or the seller of the new condo should have automatically told you about the rebate. It is nothing special and automatic.
However, you have much more paperwork to fill out as well as the following answers to two other questions will show.
===============================
QUESTION:
I'm a US citizen, who is interested in buying a vacation/investment property in downtown Toronto. Before pursuing this venture I'm concerned about a couple of things. What are the US/Canadian tax implications on monies earned from rental income? The property will be rented 9-10 months of the year. Also, are the same rules true for commercial property? Any light that you can shed would be appreciated.
====================================
david ingram replies:
I have thirty questions here and only time to answer one.
For US rules on a vacation property, you can not claim a rental loss if you use a vacation property more than 14 days OR more than 10% of the days rented. Therefore if you only rented it for 230 days, you can only use it yourself for 23 days if you wish to claim a tax loss.
Canada does not have such a specific or absolute set of rules. However, under a new bulletin, if you do not make a profit on a vacation property that you use personally at all, expect to have the Canadian CRA "them" deny any losses.
A commercial property is treated the same for depreciation purposes in Canada but is depreciated over 31 1/2 years instead of 27.5 years as a residential property would be dealt with in the USA.
For the rest, I am giving you the answer to a similar question.
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?
==============
david ingram replies
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?
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.
Canada would not have a claim on your US income unless you were in canada very ofteen on a continuos basis.
Thank you!
KXXXXXXXXXXXXXXx
============================
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
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.
Original Message -----
Name:
the_email
My question is: Canadian-specific
QUESTION: I live in Ontario and am thinking of buying
a newly constructed condo as an investment property in Montreal.
Do I have to pay the GST/HST on this purchase
if I intend to rent this property ?
=================
david ingram replies:
A new residential condo has a GST bill that you cannot get out of.
Don't feel too bad though. Although it seems an eternity away, The 7% GST replaced an old 9% FST which used to be included in the prchase price of the materials. the base prices of Condos are a little cheaper because there is no FST.
With the GST rebate, the net price is not that different although 13 years later, no one remembers.
david ingram
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