QUESTION:
Can I deduct my losses from my Canadian income taxes? How?
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david ingram replies:
If the investment property is a full time rental and you lose money, you
will file an Arizona 140 NR and a Federal US 1040 NR for each owner. Failure
to file can result in a parking meter type fine of $1,000 to $10,000 per
owner per year.
You will then change the amounts to Canadian Dollars and put the same
figures on a form T776 on your Canadian T1 General. If there is a rental
loss, it will show on the T776 and be transferred to line 126 of your T1
Canadian Income Tax return.
However, if you are using the property personally, both countries will try
and limit or eliminate your loss. It is automatic in the US if you use the
property for more than 14 days or 10% of the actual days rented (whichever
is more). So if you used the property for more than 35 days your deductions
in the US are severely restricted or eliminated all together in the US.
For Canada, if the CRA found out you had used the unit for the 90 "best
days" and "tried" to rent it for the less desirable days, they would also
turn you down under Expectation of profit rules for dual use property.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram host a LIVE talk show called "ITS YOUR
MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Local calls are taken at (604) 280-0600 and Long Distance calls are taken at
1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They are
held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900
for more information.
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Res (604) 980-3578 Cell (604) 657-8451
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