QUESTION:
I have taken a new job and am moving from Toronto to Vancouver.
On my arrival here I purchased a new home, borrowing to do so. My
current home in Ontario was mortgage free. I used my new home and
the Toronto home as security for 2 loans, the total proceeds of
which were used to buy the BC property. The BC property has a
rental suite and is currently generating income. If I rent the
Toronto property, would I be able to claim the interest on the
loans as a deduction against the total rental income from both
properties.
Thanks
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david ingram replies:
The answer is no and there are two tax cases that speak to the
Issue, Manfred Holman and Eva Huber both lost their cases in Tax
court when they tried to do the same thing.
If you had sold Toronto and bought Vancouver for cash and then
borrowed the money on Vancouver to buy back Toronto, you would
have a deduction.
As it is, you only have a deduction for that percentage of the
interest which relates to the rental suite.
There is a solution. However, it will take some years to make it
happen.
In fact "tomorrow" night, Thursday I will be giving a 30 minute
part of a 2 1/2 hour seminar on making your Canadian mortgage
deductible.
It will be Every Thursday Evening, Fred Snyder of Dundee Wealth
Management conducts one of 17 different financial seminars at his
office
Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)
Phone (604) 731-8900 to register
No cost - no obligation
Topics always cover mortgage interest as a deduction
other topics - getting the mortgage, estate planning, critical
care insurance, income taxation, differences between stocks and
bonds, and usually the most innovative HELOC mortgage offered in
Canada from Manulife Bank.
In the meantime, you can read my November 2001 newsletter on
mortgage interest deductibility at www.centa.com - click on
newsletters on the top left, click on 2001 and then on November.
Another good source of information is Fraser Smith's book, "THE
SMITH MANOEUVRE" which you should be able to get at any book
store.
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, I, david ingram am
a permanent guest on Fred Snyder of Dundee Wealth Managers' 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
Call (604) 280-0600 to have your question answered. BC listeners
can also call 1-866-778-0600.
Callers to the show and questioners on this board can also attend
the Thursday Night seminars on finance and making your Canadian
Mortgage Interest deductible.
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 davidingram at shaw.ca
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed
information or consultation and is to be regarded only as general
comment. Nothing in this message is or should be construed as
advice in any particular circumstances. No contract exists
between the reader and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or
business affairs such as at www.centa.com. If you forward this
message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
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