Hi David,You've warned people several times to not do any work on a rental property that they own in the USA, if they are Canadian (because they do not have a work permit to do that work in the USA).So, is a Canadian person permitted to do work - for free - on a house in the USA that is owned by an American friend?Thanks.
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david ingram replies:
If you are not the owner of the property and it is not for your own personal use only, you can not do any work on your son's house, your daughter's house, your mother's house or your best friend's house.
None nada. not any.
How about this. you go down and do work on your old friend's house and then your friend and his wife are getting divorced and she blames "YOU" for the divorce.
The wife calls Homeland Security and gives them pictures of your working on the house. It was an offence punishable years later, just as if she gave them a picture of you molesting a child or robbing a bank.
Technically, it is illegal for you to give a single mother with four screaming kids a battery boost because you have taken a job from an American Tow Truck driver.
So if you want to take the (admittedly very small) chance that you could be arrested, jailed and banned from the USA, go ahead and work on some one else's house or boat or car or your own rental. I had a problem myself when I was doing some 'free' work on a friend's 72 foot boat in tied up at the dock in Ketchikan, Alaska. The INSofficer came down to check us into the US and found me happily changing a hot water tank that we had waiting for us at the dock.
david ingram replies:
If you are not the owner of the property and it is not for your own personal use only, you can not do any work on your son's house, your daughter's house, your mother's house or your best friend's house.
None nada. not any.
How about this. you go down and do work on your old friend's house and then your friend and his wife are getting divorced and she blames "YOU" for the divorce.
The wife calls Homeland Security and gives them pictures of your working on the house. It was an offence punishable years later, just as if she gave them a picture of you molesting a child or robbing a bank.
Technically, it is illegal for you to give a single mother with four screaming kids a battery boost because you have taken a job from an American Tow Truck driver.
So if you want to take the (admittedly very small) chance that you could be arrested, jailed and banned from the USA, go ahead and work on some one else's house or boat or car or your own rental. I had a problem myself when I was doing some 'free' work on a friend's 72 foot boat in tied up at the dock in Ketchikan, Alaska. The INSofficer came down to check us into the US and found me happily changing a hot water tank that we had waiting for us at the dock.
I am sure that the only reason I escaped is that the fellow
who had sold it to us, came down and told the INS officer that we had tried to
hire him to install it and he had no one available for weeks because everyone
was too busy and to lay off because he was giving the port a bad name. However,
if his ex wife was complaining?
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QUESTION: Aloha David
1. Canadians or Japanese or Koreans or Austalians can buy a condo or $5,000,000 waterfront estate in Hawaii, New York or Palm Springs and rent it out.
2. They can even show the property themselves. They can NOT however, collect the rent themselves. They can hand the person an envelope and instruct them to mail the chwques to Canda or Australia or Japan or give them written instructions to direct deposit the money into a Hawaii Bank Account. They just can NOT accept the money at the same time they show the property.
If they want to accept the money themselves, they can fly back to Canada and turn around and pick up the money and return to Canada immediately. The Canadian, or, or, or just can't do anything else while picking up the money. If the renter said they needed a new refridgerator while the Canadian was picking up the check (or maybe a year's supply), the Canadian could not go over to a Home Depot and order a new fridge on the same trip.
On a trip that they do not pick up money, the Canadian can hire a property manager, hire a repair crw, hire someone to change the light bulb, shovel a sidewalk, cut the lawn, etc.
3. On any trip, the Canadian himself or herself can NOT change a light bulb,cut the lawn, fix a toilet, paint a bedroom, shovel a sidewalkor fix the doorebell on a unit that they are renting or intending to rent in the future or that they have bought to improve and sell.
4. It is US immigration law that prevents the Canadian from working on his or her rental property.
However, the Canadian can supervise the renovations or repairs as long as he or she hires US residents to do the work.
If the Candian wanted to start a business of renovating and flipping, he or she could get an E2 visa which would allow them to be there and work on their own or even others houses.
If they wanted to spend $1,000,000 and hire ten employees fotr two years, they could an instant green card by applying for and getting an E-5 visa.
5. Every Canadian owner also needs to collect Hawaii 4%GET (General Excise Tax) if they rent it on a long term and 6% TAT (Transient Accomodation Tax) if rented for short term rentals of 180 days or less to a person who has another home somewhere else, even if it is in Hawaii. As you can see, every rental to a Canadian requires the TAT and GET. The Canadian should collect 11.1111 % tax because taxes are levied on each other which should cover both.
If they do not collect it and Hawaii gets hold of them, the retroactive tax can be massive. I had one that was over $87,000 for back GET and TAT against a Candian who collected all of her rents in Canada. Even though she had a legitimate rental loss on a very expensive property when Hawaii caught up to her, they issued her a retroactive bill plus large penalties and interest.
So, 'If' the Canadian wants to collect rent "in" Canada from Canadians for seasonal rentals, that is fine. However, they also have to collect the TAT and GET taxes in Canada on their transient rentals or end up in trouble later on.
-----------------
When Can the Canadian do the work.
If the Canadian or, or, or wanted to buy a piece of vacant land, they could build a whole house themselves including foundation, framing, drywall, roofing electric, plumbing, heat pump and landscaping IF it was just for their own use.
If they own a condo, they can do any remodelling to their own condo or their own mobile home or their own
However, their Canadian adult children, Canadian Friends or Canadian trades can NOT come down and work on the weekend. They can NOT let a Canadian friend who just happens to be a remodeller, go down and stay in the unit while they change the kitchen.
I first had this explained to me on a 72 Foot converted minesweeper named Montagnais in Ketchikan, Alaska in May 1975. I was changing over a hot water tank on this boat (which i was a guest on from Vancouver to Ketchikan) and when the customs and immigration people came on board to clear the boat and personnel through customs, I was chastised by them for working on the boat. Today, it would be arrest and imprisonment.
Several months later, the same thing happened at Mount Baker when the INS threw a bunch of guys I knew out of the US for working on a friend's ski cabin.
Thirty-three years later I have heard the story 1,000 times and they get progressivley worse.
The Canadian, of course has to file both a Federal 1040NR return with a schedule E and 4562 to report the rental income federally. In addition, they have to File a hawaii N-15 Non-resident return and the Hawaii GET and TAT return
I am a US citizen living and working as a real estate agent in Maui, HI. MANY Canadians own or are looking into owning condos here in South Maui and renting them out (when they are not here) to tourists to use for their vacation. Can you help me clarify what the legal and tax issues are for these Canadian buyers? Are they allowed to rent out their condos? Can they rent it themselves? Or MUST they use a US rental agent? Can they come and do repairs on THEIR property? It would seem from your answer in http://www.askanexpert.ca/answer.asp?id=7528 that they are not even allowed to come and change a light bulb! And if that is the case, just who is "not allowing" them to do this? - the US or CANADA? Thanks for your help on this. I want to make sure that all of the Canadian buyers are getting the correct information. --------------------------------------------------------------------------- david ingram replies: I use to have a condo manager friend Howard ?? in Maui. He was a friend in Vancouver in 1965 when he managed CKLG-FM radio station. He then left and moved to Maui and got into the condo business. I am embarrased that I do not remember his last name but i have not seen him since 1979 when I rented a condo from him in Kihei. Back to your question.You have become a very powerful person. With your knowledge, you now hold the ability to have a lot of Canadians arrested and deported. You could even report them for something that they did two years ago.
1. Canadians or Japanese or Koreans or Austalians can buy a condo or $5,000,000 waterfront estate in Hawaii, New York or Palm Springs and rent it out.
2. They can even show the property themselves. They can NOT however, collect the rent themselves. They can hand the person an envelope and instruct them to mail the chwques to Canda or Australia or Japan or give them written instructions to direct deposit the money into a Hawaii Bank Account. They just can NOT accept the money at the same time they show the property.
If they want to accept the money themselves, they can fly back to Canada and turn around and pick up the money and return to Canada immediately. The Canadian, or, or, or just can't do anything else while picking up the money. If the renter said they needed a new refridgerator while the Canadian was picking up the check (or maybe a year's supply), the Canadian could not go over to a Home Depot and order a new fridge on the same trip.
On a trip that they do not pick up money, the Canadian can hire a property manager, hire a repair crw, hire someone to change the light bulb, shovel a sidewalk, cut the lawn, etc.
3. On any trip, the Canadian himself or herself can NOT change a light bulb,cut the lawn, fix a toilet, paint a bedroom, shovel a sidewalkor fix the doorebell on a unit that they are renting or intending to rent in the future or that they have bought to improve and sell.
4. It is US immigration law that prevents the Canadian from working on his or her rental property.
However, the Canadian can supervise the renovations or repairs as long as he or she hires US residents to do the work.
If the Candian wanted to start a business of renovating and flipping, he or she could get an E2 visa which would allow them to be there and work on their own or even others houses.
If they wanted to spend $1,000,000 and hire ten employees fotr two years, they could an instant green card by applying for and getting an E-5 visa.
5. Every Canadian owner also needs to collect Hawaii 4%GET (General Excise Tax) if they rent it on a long term and 6% TAT (Transient Accomodation Tax) if rented for short term rentals of 180 days or less to a person who has another home somewhere else, even if it is in Hawaii. As you can see, every rental to a Canadian requires the TAT and GET. The Canadian should collect 11.1111 % tax because taxes are levied on each other which should cover both.
If they do not collect it and Hawaii gets hold of them, the retroactive tax can be massive. I had one that was over $87,000 for back GET and TAT against a Candian who collected all of her rents in Canada. Even though she had a legitimate rental loss on a very expensive property when Hawaii caught up to her, they issued her a retroactive bill plus large penalties and interest.
So, 'If' the Canadian wants to collect rent "in" Canada from Canadians for seasonal rentals, that is fine. However, they also have to collect the TAT and GET taxes in Canada on their transient rentals or end up in trouble later on.
-----------------
When Can the Canadian do the work.
If the Canadian or, or, or wanted to buy a piece of vacant land, they could build a whole house themselves including foundation, framing, drywall, roofing electric, plumbing, heat pump and landscaping IF it was just for their own use.
If they own a condo, they can do any remodelling to their own condo or their own mobile home or their own
However, their Canadian adult children, Canadian Friends or Canadian trades can NOT come down and work on the weekend. They can NOT let a Canadian friend who just happens to be a remodeller, go down and stay in the unit while they change the kitchen.
I first had this explained to me on a 72 Foot converted minesweeper named Montagnais in Ketchikan, Alaska in May 1975. I was changing over a hot water tank on this boat (which i was a guest on from Vancouver to Ketchikan) and when the customs and immigration people came on board to clear the boat and personnel through customs, I was chastised by them for working on the boat. Today, it would be arrest and imprisonment.
Several months later, the same thing happened at Mount Baker when the INS threw a bunch of guys I knew out of the US for working on a friend's ski cabin.
Thirty-three years later I have heard the story 1,000 times and they get progressivley worse.
The Canadian, of course has to file both a Federal 1040NR return with a schedule E and 4562 to report the rental income federally. In addition, they have to File a hawaii N-15 Non-resident return and the Hawaii GET and TAT return
-------------------------------------
SUGGESTED PRICE GUIDELINES - Aug 5,
2008
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.
$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.
david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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My Home office is at:
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
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.
pert US Canada Canadian American
Mexican Income Tax service and
help.
David Ingram gives expert income
tax service & immigration help to non-resident Americans &
Canadians from New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
authority.
Phone
consultations are $450 for 15 minutes to 50 minutes (professional hour). Please
note that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada. ($472.50 with GST for in person or
if you are on the telephone in Canada) expert US Canada Canadian American Mexican Income
Tax service and help.
This is not intended to be definitive but in
general I am quoting $900 to $3,000 for a dual country tax
return.
$900 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,600 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare
Canadian only (lives in Canada, no US connection period) with two or
three slips and no capital gains, etc. for $200.00 up.
However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms,
expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or
T5008 or T101 --- Income trusts with amounts in box 42 are an even larger
problem and will be more expensive. - i.e. 20
information slips will be at least $350.00
With a Rental for $400, two or three rentals for
$550 to $700 (i.e. $150 per rental) First year Rental - plus
$250.
A Business for $400 - Rental and business likely
$550 to $700
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.
This is a guideline not etched
in stone. If you do your own TDF-90 forms, it
is to your advantage. However, if we put them in the first year, the computer
carries them forward beautifully.
--IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--
-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 or www.garygauvin.com. If you forward this message, this disclaimer must be included." -
--IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--
-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 or www.garygauvin.com. If you forward this message, this disclaimer must be included." -
