Hello -- I found your excellent website and was wondering if you
could offer advice to a potential real estate transaction in
Montréal. A friend up here advised that since you were in
Vancouver, BC it would be better to get someone in Ontario to
help me.
Here is a summary of my situation which I am providing to see if
you would be able to assist me:
I am a US citizen, living in Florida, and working for an American
subsidiary of a Canadian company. Part of the group that I manage
is at the home office in Toronto, ON I was requested to spend
more time at the home office. I volunteered to spend the summer
in Torontol and really like it here. I have been looking at
condos in the city and would like to purchase one to use as a
place to live in while I am up here. This would be primarily for
improving my "quality of life" while here, but I am also
interested in the investment potential.
I plan to be here at least 2-3 years, working 55% of the time in
Florida, 45% of the time in Montréal. The company may subsidize
my living expenses with a small allowance (otherwise I would need
to be in a hotel). I have an LLC in Florida that owns a small
office condo that I rent to another company that I own. Should I
buy the condo through the LLC and rent to myself? I plan to have
a mortgage for the condo. The price of the condo is 340k (CDN)
and I plan to put 25% downpayment. I own a residence in Florida
and it is fully paid. I could get an equity loan to pay for the
downpayment on the condo. The condo fees and taxes will run about
$660/month. There is also financing being offered by the
developer, with a 2% interest rate for 5 years.
This is my situation here and would like to figure out my "real"
costs to get into this thing, the ongoing costs, and the strategy
to minimize my taxes both during occupancy and when I go to sell
in 3-4 years.
If you feel you can help me out I would be glad to engage your
services. Otherwise, a recommendation for an equivalent service
in Ontario would be most appreciated. Thank you.
====================================
david ingram replies:
1. Your earnings in Canada are taxable in Canada when the
amount has exceeded $10,000 Canadian - You will have to prepare
and file a Canadian tax return for 2005.
2. Under $10,000 you are exempt under Article XV of the US
Canada Tax Convention but over $10,000, the whole works becomes
taxable. After paying the tax to Canada, you will claim a
foreign tax credit for the Canadian taxes on US form 1116.
It will NOT cost you any extra tax, but will put it where it
should be. As a matter of similarity, if you were working under
the same circumstances for a month in New York and a month in Los
Angeles, you should be filing a New York State and California
State return as well.
3. I trust that your company has arranged for the proper
working visa for you. An intercompany transfer seems appropriate
even if you are here part time. If you happen to be here as a
Structural engineer or any of the 63 NAFTA professionals, A
Treaty NAFTA visa might be appropriate as well but you DO need a
visa as described.
4. Buy the condo in your own name. Canada will not recognize
the LLC and it is just plain simpler. The mortgage interest and
property taxes you pay to Canada are deductible on your Schedule
A of your 1040.
When you go to sell in 4 years, Canada will tax any capital gains
at rates of 12 to 23%. In reality, we cut the capital gain in
half and tax half at rates of 22 to 44% but it easier to
understand as I first described it.
I would be glad to assist you. I charge $400 for phone
consultations of up to an hour and you can send the odd email as
well. Make that a sensible email at irregular times.
I do not know of anyone doing what I do in Montreal or Florida
other than the big four Accounting firms like KPMG. I did have 14
offices in Ontario and Florida back in the 70's
And, I am will be leaving for a 20 day holiday on Thursday as
follows:
Away
Jane, my daughter has politely reminded me that we have not taken
a vacation for some 34 months. In fact, I have only been away
for two days and one night to Seattle in 2003 and 4 days and
three nights to Kelowna and Kamloops which was half business in
2004.
I have to study for and write a UBC immigration exam on Tuesday
Aug 16th and intend to leave the next day for two weeks.
Then I will be putting the kids in school and taking a couple of
days to get re-organized until about Sept 8th when I write my
last exam..
This is to any senders of email messages that I will not likely
be responding to any email messages I receive between Aug 14th
and Sept 9th or so. I get about 300 a day (most junk mail) and
It is impossible to reply to many, if any. Any questions will
likely be ignored. If you want to retry again after Sept 8th, it
is more likely to be answered.
I am NOT taking a laptop, and am NOT leaving any messages
machines on. Most of the time, I will be available on my cell
phone (604) 657-8451 but as I will be in the Rockies and
Dinosaur Provincial Park for some of the time, there will be
whole days when it will not work. Not likely two days at a time
though.
I was going to have David Holroyd fill in for me this two weeks
but he is too busy in Mexico so this will be the first time that
we will not have a cross-border tax person available to talk to
you on a daily basis.
Peter Ingram, my son and the reception person for the last four
years during tax season will be manning the phones at the home
office Monday to Friday from Noon to 2 PM and can take a message
if something is "really" important. However, Peter does NOT know
income tax. Please do not ask tax questions or ask him to do
anything but take a message.
Remember that 30 day letters do NOT have to be answered by me in
30 days. If you get a letter requiring an answer in 30 days, drop
a line to the tax office saying that I am unavailable until Sept
8th and then realize that there may be 15 people ahead of you and
I might be a week getting back to that particular letter.
I expect all will be caught up by Sept 21st, so tell the Tax
people (US or Canada) that I will respond by Sept 21st.
If there is a Canadian Tax Question, Gloria Ingram at (604)
585-1955 may be able to help you out but she does not deal with
non-residents or other cross-border situations. Please do Not
call her if your problem involves "anything" of a cross-border
nature.
Hoping that this works out for you.
==================================
In addition, you can always phone the radio program on Sunday
mornings. We took a call from Jackson Pointe, Ontario this
morning for his cost of a long distance phone call but I will be
away from the program for the rest of August.
----------------
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.
This from "ask an income tax and immigration expert" from
www.centa.com or www.jurock.com or www.featureweb.com. David
Ingram deals on a daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems
for the United States, Canada, Mexico, Great Britain, the United
Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,
China, New Zealand, France, Germany, Spain, Italy, Russia,
Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland,
Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India,
Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands,
US, UK, GB, and any of the 43 states with state tax returns, etc.
Rockwall, Dallas, San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and
Immigration Tips, Income Tax and Immigration Wizard Income Tax
and Immigration Guru Income Tax and Immigration Consultant Income
Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR
6 Non-Resident Real Estate tax specialist expert preparer
consultant expatriate anti money laundering money seasoning
FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border
transactions
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.
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