David: Thanks for the minutes you just spent with me on the phone about taking money to Seattle to pay for a car I have already ordered and put a deposit on.

Please send me the links for the forms for both the Canadian side and the US side for bringing the money to the US.

What happens to this information after I provide the forms?  Just record-keeping for both countries to determine how much money is going in each direction?

Thanks,


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david ingram replies:

Taking money across the border to buy a car is an interesting experience.  The last time I did it, I handed the form in to the US person at the border and he looked at it and said "it's wrong", go inside.

So in I went and it was wrong. 

I was going down to buy a used cadillac and had $15,000 US with me and had declared it.

Unfortunately, I also had some Canadian money with me and had neglected to include it.  The border guard looked at the $15,000 US and instinctively knew i had some Canasdian cash as well and the inside fellow gave me royal hell for not declaring "everything" 

The US forms eventually go to Detroit and the Canadian forms go to FINTRAC in Ottawa.  However, YOU hand them in at the border.

FINTRAC
24th floor, 234 Laurier Avenue West
Ottawa, ON
K1P 1H7
CANADA

Email
[email protected]

Telephone
1-866-346-8722 (toll free)

Facsimile
(613) 943-7931


The two organizations actually do record them and keep them on hand to compare to other information.

Hi David,

 

I've worked with John Mckilligan as his client since 1991 when there was Centa Realty!  So technically, you had my listing in West Van.  John suggested I ask you a question (and say "Hello").  Am thinking about paying cash for a piece of land in the United States.  No mortgage, no rental income, few if any visits to the property...what happens?  More specifically - do I pay purchase tax?  do i pay a sales tax/capital gains in a few years when it sells?

 

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david ingtram replies:

Every Province in Caanda has different real estate laws.

BC and Ontario have a  propery purchase tax.

BC restricts rentals in strata title buildings

PEI has a non-resident restriction on ownership as does Australia.

Every state in the US has different laws with Vermont and Californis (as an example) having an alternative minimum tax on Real Estate profits.

Florida, Washington, Alaska, Nevada, Texas, Wyoming have no personal state return while Tennessee only taxes interest and dividends and New hampshire only taxes self-employed business profits.

The rest and the federal government all tax real estate profits and capital gains.

And the above answer is always subject to change,.  When i started in this busienss only about 17 states had income tax and new 43 do.

I do not know of any property purchase taxes in the US but I am sure at least one jurisdiction will have one.

If you want to install a cuilvert, etc, yourself to gain access or drain it and it is a recreational site for you to go and park your motorhome on for weekends, you can do that.

If the intent is to hold for future commercial resale, you can NOT even cut down a tree or install a number on the fence (if there is already a fence since you cannot build a fence wither).

.This older question about doing something to a building, etc, will also help. -------------------------------------------------------

QUESTION: Hello David,

I'm living in Vancouver, finally paid off the student debt but 
don't see myself getting into 
the expensive Vancouver market. I do however like to ski and was thinking of buying an 
inexpensive trailer (25k Cdn) in Maple Falls Washington. 
 
However I'm not sure what other expensives I should expect given that it's in the US. 
I'm not trying to make this an investment with a high return, but I would like to do some 
handy work to it to increase the value. If I add about 10k worth of value, how would that 
affect my taxes in the long term?

Thanks for the advice.
----------------------------------------------
david ingram replies:

One of my favourite weekends ever was in 1973 at the Chandelier (think it has a different 
name now) when marooned at SnowLine  because of the gas shortage when 
one could only buy gas on odd days if your licence pklatre ende dwith 
an odd number and even days when it was an even number.

Strangely, it was that weekend 34 years ago that lets me answer you 
question now.

The cabin I was staying in was not a rental but was built by the fellow 
who owned it.  When he was building it, buddies would come down and help 
him and one weekend, the INS raided the spot and deported a bunch of 
his friends for working in the US .

He was fine building it because he owned it but no one else can hammer 
a nail, paint a board, install a sink, or carry a shingle if they 
are not either an owner or a legal US citizen or US resident with a 
green card.

If your buddy is working and living inthe US with a TN, H1, O1, P1, 
L1 or any other visa but a green card, they cam NOT help you either.

And, if you are intending to rent the trailer out 'EVER', 'you' can 
NOT hammer a nail, sweep the front steps or clean the toilet.


Assuming you are buying this trailer on its own lot, when you go to 
sell, you will owe the US income tax on the profit.

If it is your only pioece of real estate at that time, you will not 
owe Canada any tax because you can claim it as your personal residence 
if you have not bought another place.
-------------------
However, I would far prefer that you stretched your resources to buy 
something in Canada to live in and combine your present rent and the 
payments you would have to make for the trailer to buy your home in 
Canada. If you can't afford a one bedroom, buy a studio.  Go down to 
Ikea on teh Lougheed highway and look at how much they can put into a 
small space.  

Interestingly, I read the other day that Ikea has now sold enough 
furniture in North america that 10% of all children are conceived 
in an Ikea Bed.  Now that is information worth knowing.

Good luck

My question is: Canadian-specific

QUESTION: Thank you in advance for your website. My husband is a u.s. citizen and I have a green card to live/work in the u.s. permanently, am a Canadian citizen.  We want to buy lake property costing $300k for vacation use. We have IRA $120k; 401k $350k, stock $26k, cash $38k. We owe $50k on our permanent california residence valued at 430k. Monthly retirement income is $3275.  I thought we would use the cash, stock, and cash out some of the 401(k) to buy the property outright. Is this wise?

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david ingram replies:

On the surface it might be  okay but you need to do a spreadsheet to figure out the most tax efficient way.

Because the mortgage interest and the property taxes on both properties is a schedule A tax deduction, it is likley that you would be better off to increase your mortgage on the family house and finance the cabin more than you intended to.

Then, each year you would cash in enough of your pensions to make the payments.  This will undoubtedly result in lower tax overall.

Do consider taking out your US citizenship.  It will / should make it easier to deal with the estate situation if your husband passes away. And, if you should decide to come back to Canada at some time, they can not stop your returning to the US in the future if you should decide you want to go back to the US.

Over the years, I have had a couple of dozen situations where your husband pases and you return to Canada after and then decide to go back to the US becasue the kids are there or something and find that your green card is no longer valid and thye USCIS will not let you back in.. �

QUESTION: HI, I AM A AMERICAN CITIZEN..CAME TO SPAIN TO WORK ,LIVE, AND PERHAPS EVEN RAISE A FAMILY HERE...I THOUGHT THINGS WERE GOING TO BE SIMPLE FOR THE FACT THAT I DID NOT COME HERE ILLEGALLY.BUT, WHILE HERE I FOUND OUT THAT I CAN NOT LEGALLY WORK HERE BECAUSE I AM NOT A RESIDENT , OR CITIZEN OF SPAIN ...HOW AND WHERE CAN I APPLY?? I NEED TO KNOW STEP BY STEP AS WHAT TO DO...HOW LONG WILL THE PROCESS TAKE???AND DO I HAVE TO GIVE UP MY AMERICAN PASSPORT SOMETIME IN THE PROCESS??? OR CAN I HAVE DUAL CITIZENSHIPS...

--------------------------------------------------------------------------- 

david ingram replies:

You cannot come to Canada or go to Mexico, Spain, England, Australia, France, Costa Rica or New Zealand and work without a working or residential visa. 

I have no personal knowledge of immigration or work visas for Spain.

However, it is too bad that your father was not born in Italy or England as mine was. (maybe yours was as well). If married, your spouse might be the key. If single, find a nice spanish lady to marry and have her sponsor you.

With my father born in Liverpool, I can apply for British or UK citizenship and that would give me the right to work in Spain and another 24 EU countries under the rules of the European Union..

In some cases, even a grandfather born in one of the EU countries might give you the right to that countries citizenship.

If for instance, your grandfather was born in Italy, your father was likely an Italian citizen and you can likley claim Italian citizenship depending upon some dates. see http://www.italiandualcitizenship.com/

If you can't find some sneaky EU citizenship, find a Spanish employer who will do the paperwork for you.  Of courese this implies a major employer since it is highly unlikely that a corner store would go to that trouble.

If a Spanish citizen wants to work in the US, with the exception of an E5 or E2 visa (which require major capital investment) and an 'O' visa which requires superior international regognition, an individual can NOT just get a visa to work in the USA.  The company has to apply for the visa and the visa is issued for the benefit of the company (and US commerce) NOT for the benefit of the individual.

And, of course, if you are a fourth generation American on both sides, find that compamy to hire you and sponsor you and bone up on your Spanish.

If you do manage to find a European grandparent or parent who can pass citizenship, you do NOT lose your US citizenship. 

QUESTION:

I would like to set up a legal structure
to do business consulting work in the US.

I am canadian citizen attending  Xxxxxxxxxxxxxxxx.  Currently, I work as a graduate student for the university on an F-1 VISA. 
Academically, I also have an MBA, Bachelor of Education and a Bachelor of Arts in Mathematics.  Professional, I have gained approximately 7 years of professional experiences.


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david ingram replies:

Of fthe top of my head you can NOT set up- a business structure to do what you want unless you put up the cash for an E2 or an E5 visa.  See Jan 1995 newsletter in top left hand box at www.centa.com for info on an E2 visa.

If you have $500,000 US to invest, you can buy a green card in Whatcom County by investing in a Senior's home in Bellingham.  Contact David Andersson at (604) 608-0818

What you likely need to do is obtain a TN as a management consultant.  However you will need a US or a Canadian business that you do not own to hire you.  They can then sell your services to various other organizations.

To get a management consultant TN visa, you have to prove that you have FIVE years experience in the field that you wish to consult in. 

Hello there,   I found your email on a discussion on Canadians buying real estate is the US. Can this be done with a mortgage from a Canadian financial institution? Is it possible to get approved for this?

Thanks,     

--------------------------------------------------

david ingram replies:  

It is not very likely that any Canadian financial institution without a US branch would put a mortgage on a US property. 

However, if you haveother Canadian properties, nothing stops you from borrowing money in canada on those properties and using that money to buy US or UK or spanish property.  

hi david, you may remember xxxxxxxxxx and myself (fiance) coming to see you in feb 2006. he is in the US miliotary and we've since married. he's residing in WA and i'm here in vancouver.   i am late filing my income tax. after i enter my basic persona amount for myself, it asks me to enter the amount for spouse (8344.00) minus his net income to get the result . however, as he is a us government employee i am required to put 'nil' for his income, so in regards to the non refundable rax credits,  am i inputting a ''0' for his income which would give the max amount of 7585 or is this a '0' as well?   thank you for your help, ------------------------------------------------
david ingram replies:

It is a 'zero' as well.

You should put his net income in Canadian dollars in the line asking for his net income.That means that you do not get GST or any other credits and do not claim him as a dependent.

Assumiong he made $100,000 Canadian, his Net income for Canadian tax purposes is $100,000.  His taxable income on a Canadian Tax return would be zero as you would deduct the whole salary on line 256 under Article XIX of the US Canada Income Tax treaty.

However, his NET income is whatever his gross salary is less any of the amounts from lines 200 to 234.

He and you CAN and SHOULD file a US 1040 joint return however.  It will save him several thousand dollars.  Your income is reported on that retrn in US dollars and neutralized by filing form 1116 to claim a foreign tax credit or form 2555 to exempt earned income or a combination of both.

If he did not file a joint return for 2006, he should file a 1040X and amend it. 

You / he should likely have us do it if that is not what was done in the first place.

Dear Mr. Ingram:

Re the transfer of Canadian Money to the U.S.: I have a life insurance policy I bought when I lived in Canada in the early 80's.  I've been paying premiums on it ever since, even though my wife and I moved back to the States in the late 80's.  I am a U.S. citizen and my wife is dual.  When I pass on, the insurance pay-off will be sent to my wife through either a cheque (straight from the insurance Co) or a bank transfer which would be faster.  Will the sum be reported as it is substantially more than $10,000?  I assume there are no taxes in either countries on insurance pay-outs. Are there any other issues I need to address regarding this?

Thanks for your answers.  

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DAVID INGRAM REPLIES:

Any cross border transaction of over $10,000 US or Canadian MUST / should be reported by someone.  In the case mentioned, the Life insurance company would report to FINCEN in Canada that they had sent the money across the border to your wife.  When she deposited the cheque in a US financial institutuin, that institution would report the 'over $10,000' deposit from a foreign source.

In the meantime, if the life insurance policy has a cash value of over $10,000 or it plus other acounts you and your wife might still have in Canada total over $10,000 US, you shoul dbe filling in forms TDF 90-22.1 (see the bottom two questions on schedule B of your 1040) Be advised that any US resident with foreign bank or other financial accounts is required to file schedule B and answer the two questions on the bottom).  If the life insurance policy is a term policy with no cash value, it does not count.

However, failure to file a required T DF 90-22.1 form has a minimum US penalty of $10,000 and a maximum penalty of  $500,000 plus five years in jail.

----------------------------------------------------------



On Sep 17, 2007, at 12:22 AM, US / Canada Income Tax Help - CEN-TAPEDE wrote:
------------------------------------------ I just saw a question you answered about a Canadian living in the US as a permanent resident selling a home and wanting to transfer the money to a US bank. (http://www.david-ingram.com/CEN-TAPEDE/archive/Week-of-Mon-20061009/002904.html) I'm in the same situation, except I want to keep most of the money in Canada. You said, below, that the banks will notify the treasury on amounts over $10,000. Is this $10,000 at any one time, or per calendar year?   What I want to do is bring enough money to pay off my US credit cards. Through several bank withdrawals and cheque deposits I've already put about $9600 Canadian into my US bank (not at the same time) to pay bills. Do I need to wait until next year to bring more in, or is it okay to continue doing this? I would need maybe another $11,000 to pay everything off here.   Thanks!       ------------------------------------------------------------------------------------
david ingram replies:

If you have transferred $9.600 so far and have paid it out already, there is no problem.  If you are transferring smaller amounts because you are trying to amass an amount over $10,000 for a single purpose, then you have to report the transfer of more than $10,000 AND the financial institution you have transferred the money to in the USA should be reporting the transaction as well.  In fact making several transfers for a total of $12,000 could make you look like a suspicous person whereas one $15,000 transfer would never raise a suspicious person report, especially if the money was then paid out to credit card companies.

The rules for reporting take place for both countries when there is a transfer (or series of transfers) of more than $10,000.

If you do it as a bank transfer, you do not need to worry.  The bank will do the reporting for you.

If you take cash out in Caanda and take it across the border yourself, YOU have to do the reporting to both countries.