QUESTION: I am an American citizen who is purchasing a new townhouse in
Vancouver. I plan to maintain my primary residence in the US and rent the
house near the UBC campus 9-10 months a year. I plan to treat the house as
a second home under US tax law which requires me to be in residence 10% of
the rental days and I will not exceed 6 weeks in any year while I work. I
have downloaded information on landlord/tenant responsibilities in UBC. My
questions relate to tax issues: (1) what do I need to do to comply with
Canadian tax law on the rental income; (2) do I need to file a Canadian tax
return; and (3) are my closing costs deductible on my US return?
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david ingram replies:
Before you rent it the first day, you need a "tax" agent who may or may not
be the actual rental agent.
You and the tax agent have to sign and submit Canadian form NR-6 which
guarantees that the agent will file your Canadian Section 216(4) income tax
return if you fail to do so.
Your closing costs are added to the ACB - Adjusted cost Base - of the unit
and depreciated over 27 1/2 years on schedule 4562 and schedule E of your US
return.
Any tax paid to
Canada will be deducted by means of US form 1116 attached to your 1040.
Glad to look after most of this for you.
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
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Call (604) 280-0600 to have your question answered. BC listeners can also
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David Ingram's US/Canada Services
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