My_question_is: US-specific
Subject: Buying US Rental property
Expert: taxman at centa.com
Date: Wednesday January 31, 2007
Time: 10:51 PM -0500
QUESTION:
We have a number of questions. We are Canadian citizens and are about to
purchase a US rental property.
We have a number of questions:
1. Is there any advantage/disadvantage to
purchasing the property in our own names instead of a corporation from both
a taxation on the income and from an estate planning standpoint. If we need
to set up a corporation, what is the cost and the annual maint. fees to
keeping. Can we hold the shares of the corporation?
2. Is there any advantage or disadvantage from a taxation standpoint of
obtaining financing to purchase the rental in the US or Canada?
Would appreciate any other suggestions you might have given your expertise
in the area.
Thanks
========================================
david ingram replies:
1. If you want to complicate your life, start a US corporation.
2. Get your financing where you get the best rate. If the money was borrowed
to buy an investment property, the interest is deductible in both countries.
For the US, you will file a 1040NR with a Schedule E and 4562 each (assuming
you are both on title). If you are buying in North Dakota or Minnesota, you
will have to file a state return as well for each of you.
For Canada, you will file a regular T1 General with a schedule T776 to
report the rental.
If you made a profit and paid US tax, you will claim credit for the tax paid
to the US by filling in lines 431 and 433 of schedule 1 of your T1.
My brother Jim was a guard at Stony Mountain 20 years ago and the old Deputy
Warden Colonel Wickey was a family friend in the 50's.
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