Took our home with no mortgage and took out $ 179000.00
mortgage on this
property . Used it as a rental property . We then purchased a
new home . Using the equity from our first home , along with a
large mortgage on our new home . We have claimed all our rent as
income and have had our taxes done by an accountant . They have
written off the mortgage interest on our rental property . We
have now been total that we are not allowed to do so .
Do you know what was done wrong and how can we fix it ?
-----------------------------------------------------------------
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david ingram replies:
The purpose of the mortgage which was on the rented house was NOT
to buy or improve or remodel the rental house. The purpose of
the mortgage was to buy your personal residence and the interest
is not and never was and will not be deductible in the future.
There were two income tax cases in 1979 that helped make the law
in this case. One was Eva Huber and the other was Manfred Holman
and I am sad to say that I was the agent in the Manfred Holman
case and lost.
However, the real case that made the law was the Bronfman Estate
case before the Supreme Court of Canada in 1987.
If your accountant knew that the mortgage monies had been used to
buy your principal residence the accountant was in the wrong.
However, it is my experience that he or she likely just took the
figure you gave him without any questioning.
You can find out more about mortgage interest and the rules by
reading CRA bulletin !T-533 which you can find at:
http://www.cra-arc.gc.ca/E/pub/tp/it533/it533-e.html
And you can find out how to make all your mortgages deductible
over time by going to www.centa.com and clicking on the November
2001 Newsletter in the top left hand box on the home page - just
go to http://www.centa.com/CEN-TAPEDE/November_2001.htm - this
newsletter will show you several different methods you can use to
make the mortgage deductible over time.
Next you can get hold of Fraser Smith's "The Smith Manoeuvre".
This excellent book gives a detailed account of how to deal with
the situation.
Next you need a mortgage broker that understands the system. Try
Glen Kelleway - glen at mortgageitright.com - (604) 476-0053.
And for a free seminar, I will be at Fred Snyder;s Thursday 7 PM
seminars through all of September
And last but not least there is the Sunday morning radio Show
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.
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
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax
or phone outside of those hours as this is a home office)
email to taxman at centa.com
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"
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,
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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
Alaska, Alabama, Arkansas, Arizona,
California, Colorado, Connecticut,
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Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey,
New Mexico, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon.
Pennsylvania, Rhode Island, Rockwall,
South Carolina, South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
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and Dallas Houston Rockwall Garland
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