Hi David, I've been reading everything on the website for some time now and think it's terrific! Now some questions hopefully you can answer for me. 1. My wife and I plan to purchase a home in Ontario. We are US citizens and currently reside in the US. We have no CDN citizenship. Initially we plan to use the home as simply a getaway/vacation/etc place (not investment property). There is a possibility of moving there fulltime in a couple of years. Are we better off getting the loan in the US or Canada based on the current exchange rates? I'm approved for a CDN mortgage at HSBC and if we funded it thru the US we'd borrow against our current home using a home equity loan. (rate is 5.125 for 15yrs but loan origination fees are almost $4000 USD.) My understanding is CDN banks don't charge all the ridiculous fees US banks do. If you think you are going to move to Canada, figure out the end figure over "x" number of years. The US rate is fixed, the Canadian rate will change every few years. Your largest danger is the exchange rate. If we go to a dollar close to par, you will wish you had borrowed the money in the USA. If the rate reverts to the 1993 > 2003 exchange rates, you will wish it was in Canada. Split the difference - Borrow half in the US and the other half in Canada. NO ONE CAN tell you what will be the best any better than that. 2. If we sell our home in the US some day, I can write off against the purchase price the improvements I have made, correct? I spent thousands finishing the basement (built 2BR, 1BA, heating, etc). I also built a 30'x40' garage on the property. The improvements become part of the ACB (Adjusted Cost Base) 3. Here's where it gets a bit murkier. I built the garage for an Ebay business I run as a sole proprieter. I use the garage STRICTLY for my business. I have never claimed any deductions for it though as my understanding is I'd have to amortize it over a certain period and then once we sold the property I'd have to payback the deduction I received..? The sale of the property wouldnt generate more than a $125k (or is it $250K.. I cant remember) gain so there would be no gains tax (so I woudn't necessarily need the cost of the garage to help bring up the adjusted purchase price of the home). Do you recommend taking the write off each year against the business income and what rate is it amortized? I spent about $10000 building it. I started it in 2003 and was done building in 2004. There is no tax on your home if you do not deduct any expenses up to $250,000 each in profit. If there are two of you and you sell it, there can not be any tax on a house sold for less than $500,000 as a couple or $250,000 for an individual. You can run the eBay business from Canada with no problems although you will want a warehouse on the US side because taking things back and forth across the border is a nightmare for an eBayer. 4. The CDN home has an unfinished basement. If I spent the money to have it completed, according to the website that is in deductible in Canada (adjusted purchase price). Any chance of magically carrying those deductions over to a US 1040 too? There is NO deduction in Canada for finishing the basement unless it is a rental. Then it is still only added to the ACB and depreciated and the depreciation can only be deducted if there is a rental profit. 5. If we eventually move, and I keep the Ebay business, can I run it out of the US? I purchase and resell all my goods in the USA with a couple of sales per month going to CDN citizens. Where would my tax liability lie? I'm assuming that if I purchase goods in Canada and resell them anywhere that income generated from those sales would be taxable in Canada. Is that a safe assumption? As a resident of Canada, you are taxable on your world income. As a US citizen, you are taxable on your world income although there is an up to $80,000 earned income exemption for foreign income earned outside of the United States. See form 2555 and instructions. 6. Taxes and interest paid on any home loan (whether US, Canada or Timbuktu) is deductible on my 1040 sch A? What currency&value does the IRS use? i.e. if we paid $2400 CDN in property taxes, do we file it as $2400 USD or do we need to convert the currency at the going rate? When is this rate determined? It can fluctuate through the year. Or do they simply take the rate at the end of the year? You need to convert the Canadian figures to US and the US figures to Canadian. 7. Is there anything like the Manulife One account in the USA? It sounds like a heck of a deal! There are accounts like them in Australia. I have not heard of such an arrangement offered on a general basis in the United States and Manulife Bank is the only one offering it in Canada. Thank you! ------------------------------------------- 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, Fred Snyder of Dundee Wealth Management and I, David Ingram host a 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 Local calls are taken at (604) 280-0600 and Long Distance calls are taken at 1( 866) 778-0600 Callers to the show are invited to attend free seminars on financial planning with such specialities as deductible mortgage interest. They are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900 for more information. ========================================= David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Res (604) 980-3578 Cell (604) 657-8451 (604) 980-0321 Fax (604) 980-0325 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, 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 and Houston Texas Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax and ImmigrationWizard 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 4789 4790 TDF-90 Reporting $10,000 cross border transactions ========================= 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 Nunavut 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 ============================ 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, 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 -- No virus found in this outgoing message. Checked by AVG Anti-Virus. Version: 7.0.300 / Virus Database: 265.8.7 - Release Date: 2/10/05 -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20050213/81961391/attachment.htm
