My_question_is: Canadian-specific
Subject: Accruing Special Assessments
Expert: taxman at centa.com
Date: Friday March 24, 2006
Time: 11:05 AM -0800
QUESTION:
Hi David,
I own a rental condominium in BC. A Special Assessment has been
levied against all owners to pay for repairing damaged stucco
siding.
I have two questions:
1. Is the special assessment deductible against rental income as
it is due to poor maintenance practices in previous years?
2. As the special assessment is due to insufficient money being
spent on building maintenance expenses in previous years, can I
accrue the expense against 2005 income even though the assessment
is not payable until 2006?
Thank you.
-------------------------------------------------------------
david ingram replies:
1. The answer is yes if the unit was always rented. If you
rented it out because you discovered it was a leaky unit and
someone told you that you could deduct the repairs if it was a
rental, the answer is NO - it must be added to the Adjusted Cost
Base (ACB).
2. Rentals are assessed on a cash basis. You can only claim
it in the year paid. If you borrow the money to pay for it, it
is a deduction AND you can deduct the interest on the repair
loan. So if it was $10,000 as an example and you have a
non-deductible mortgage on your own house and you have the
$10,000 in hand, pay your non-deductible mortgage down $10,000
worth and then borrow the $10,000 to fix the rental. See the
November 2001 Newsletter at www.centa.com ( top left hand
box) for more information on this.
I wrote another reply for this several years ago for COLCO
(Coalition of Leaky Condominium Owners). You can read it at
http://www.myleakycondo.com/ingram.htm
When Mike Farnsworth was the BC Minster of Housing, he wrote an
interesting letter to the CRA. It is also on the COLCO site at
http://www.myleakycondo.com/farnworth.htm
People with leaky condos would be well advised to look over the
whole COLCO site at http://www.myleakycondo.com/faqs.htm
This is still a major problem out there. Last night I did a
return for a Boston owner of a Vancouver Leaky Condo. Their
special assessments in the last three years have been over
$52,000 - The building was nine years old when they bought it and
there were numerous referenced to leaks in the Strata Council
Meetings. However, the realtor representing them did not mention
the fact at all and was acting as a dual agent.
My recommendation is that if you are a buyer, you NEVER sign a
dual agency agreement with your realtor. Have your own buyer's
broker when you buy. Make absolutely sure that you have charged
your realtor with the responsibility of protecting "YOUR"
interests and informing you of everything that may be wrong. If
the realtor has NOT read the minutes of the strata council in the
building that he or she is trying to sell you a unit, find
another realtor.
Incidentally, there is NOTHING wrong with buying a leaky unit as
long as you know it and have taken that fact into account with
your purchase offer.
My apologies to those conscientious realtors who have performed
well and honourably through this crisis but for every Carmen
Maretic, or Ross McDonald or John Mckilligan or Christine Louw
who does disclose everything for their buyers, there are a dozen
who just seem to keep their mouths shut and let the buyer beware.
And one other point. I understand most building inspectors who
inspect a condominium will NOT give an opinion on the building
itself. For one thing, they are not qualified. If you need a
building inspection, get hold of Dr Death (as the realtors call
him). Ed Witzke was the first person to expose leaky condos in
Vancouver. We did it together on January 27, 19"8"7 on CKO Radio
when we did a 90 minute story on it. Ed is a graduate architect
from UBC but does not act as an architect. Ed did NOT blame
builders particularly. He blamed the architects for designing
buildings and not inspecting them as they are built.
I would point out that more than 70% of the leaky condos today
were designed and built AFTER our broadcast and for the next 5
years
E was a voice in the wind until the David Barrett Commission
pointed out the problems. Now what did the BC Architectural
Institute do after our Broadcast. Instead of going to ED and
asking "what do we do ED?", I understand that the institute
fined him $10,000 for conduct unbecoming an architect. Remember,
it wasn't the building code itself. If so, 100% of the buildings
built would have leaked. No it was the design and the use of
improper materials. It wasn't stucco by itself, it was the
application of stucco without proper flashing. It was using
water logged hemlock in sealed walls where it could dry-rot
without any new moisture, it was installing j-tubes backwards and
a dozen other things.
Was Ed's work recognized? YES!!! He was hired by the CMHC to
produce a video on how to buy a condominium which you can buy
from the CMHC.
A Condo Buyer's Guide - Video
Available from C.M.H.C. Call 604-731-5733
A private home inspector shows you what to look for and how to
evaluate a condominium for potential moisture problems before you
buy. Produced by Double M. Productions and sponsored by CMHC, the
BC Federation of Labour, the BC Ministry of Municipal Affairs and
the Real Estate Institute of BC.
He also authored a best selling book on the same subject. You
can buy the book at Amazon or Abe Books for about $30.00 at
http://dogbert.abebooks.com/servlet/SearchResults?sts=t&an=ed+wit
zke&y=7&x=48
And if you are thinking of buying any building, there is a wealth
of free information, articles and tips at his site at
http://www.witcobuildinginspection.com/
I have spent an hour answering this with about 35 returns I
should be working on instead, My apologies to Ken and Amy in
particular whom I promised I would finish today until I read
another leaky condo question after the leaky condo return last
night. The whole situation makes my blood boil.
=========================
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA)
time - (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 for expert help, assistance,
preparation, or consultation 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, 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 Houston
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and
Immigration Tips, Income Tax Immigration Wizard Antarctica
Rwanda Guru Consultant Specialist Section 216(4) 216(1) NR6 NR-6
NR 6 Non-Resident Real Estate tax specialist expert preparer
expatriate anti money laundering money seasoning FINTRAC E677
E667 105 106 TDF-90 Reporting $10,000 cross border transactions
Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US
David Ingram expert income tax help and preparation of US Canada
Mexico non-resident and cross border returns with rental dividend
wages self-employed and royalty foreign tax credits
Alaska, Alabama, Arkansas, Arizona,
California, Colorado, Connecticut,
Delaware, District of Columbia, Florida,
Garland, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky,
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
Northwest and Nunavit Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas Taxman and Tax Guru and wizzard
wizard - consultant - expert - advisor -advisors consultants -
gurus - Paris Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo Zimbabwe
international non-resident cross border income tax help
assistance expert preparation & immigration consultant david
ingram, experts on rentals mutual funds RRSP RESP IRA 401(K) &
divorce preparer preparers consultants
New York, Boston, Sacramento, Minneapolis, Salem, Wheeling,
Philadelphia,
Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples,
Fort Myers,
Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson,
Green Bay,
Minot, Portland, Seattle, St John, St John's, Fredericton,
Quebec, Moncton,
Truro, Atlanta, Charleston, San Francisco, Los Angeles, San
Diego,
Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun
City, Tulsa,
Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello,
Bellingham,
Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City,
Lawrence,
Houston, Albany, Framingham, Cambridge, London, Paris, Prince
George, Prince
Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague,
Lisbon,
Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers,
Berlin, Hamburg
Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai,
Beijing,
Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red
Deer, Olds,
Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie,
Davidson,
Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey,
Edinburgh,
Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney,
Nanaimo,
Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich,
Kyoto,
Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries,
Squamish,
Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope,
Penticton,
Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis,
Centralia,
Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson,
Fort St
James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape
Spears,
Truro, Charlottetown, Summerside, Niagara Falls, Albany Zimbabwe
David Ingram specializes in giving expert income tax and
immigration help to American and Canadian citizens living out of
their home countries from Zimbabwe to Saudi Arabia to Mexico to
China or Chile - Cross border, Non-resident - dual citizen - out
of country investments are all handled with competence and
authority.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20060326/19aacecc/attachment.htm
What's Related