Dear Mr. Ingram,
I moved with my family to the UK halfway through 2003, stayed for three
years, and moved back to Calgary halfway through 2006. We became non-
residents when we left (at the advice of CCRA).
While we were away we rented out our home, and then moved back in
when we returned. There's the problem. We are deemed to have sold
and then re-acquired our property, and so we must pay capital gains
on the appreciation. Not knowing what I was doing I tried to file
all my taxes myself and claimed CCA - it seemed like that's what the
form wanted. I've been advised now that I should have claimed a 45-2
and designated the home my principal residence while we were away,
and definitely NOT have claimed CCA. HELP!
Can I go back in time and fix this? How can I designate my principal
residence to have been in Edmonton when I'd made myself a non-
resident? Can I file one of these 45-2's retroactively? Can I undo
the CCA?
My question, I suppose, is what SHOULD I have done in the first
place, and can I go back and fix anything now?
Crying in Edmonton,
I moved with my family to the UK halfway through 2003, stayed for three
years, and moved back to Calgary halfway through 2006. We became non-
residents when we left (at the advice of CCRA).
While we were away we rented out our home, and then moved back in
when we returned. There's the problem. We are deemed to have sold
and then re-acquired our property, and so we must pay capital gains
on the appreciation. Not knowing what I was doing I tried to file
all my taxes myself and claimed CCA - it seemed like that's what the
form wanted. I've been advised now that I should have claimed a 45-2
and designated the home my principal residence while we were away,
and definitely NOT have claimed CCA. HELP!
Can I go back in time and fix this? How can I designate my principal
residence to have been in Edmonton when I'd made myself a non-
resident? Can I file one of these 45-2's retroactively? Can I undo
the CCA?
My question, I suppose, is what SHOULD I have done in the first
place, and can I go back and fix anything now?
Crying in Edmonton,
----------------------------------------------------
david ingram replies:
When you leave the country, you can NOT file a section 45(2)
and declare the house as your principal residence if you also declare
non-residency AND do not report your UK income to Canada.
If the house had stayed level or gone down in
value, you would not have a problem. However, the amazing price increases
have left you taxable at this time because ofrficially, you only have 90 days to
change a deduction for capital cost allowance and your times for the 2004 and
2005 returns are long past.
Yiur problem is not because you were in England. Your problem
is the CCA claimed. Even if you had moved to Regina or Vancouver
or Red Deer or just tried living in an apartment down the street in
Edmonton, you would be paying capital gains tax now if you moved back into the
residence after claiming CCA.
In other words, and to repeat myself, it was not the out of
country situation which is causing you the trouble.
I am afraid that I can NOT give you any answer to solve
this. You could try filing T1-ADJ forms for the years to try and get
the CRA to reverse the CCA decution for the time you claimed it. However,
I do not give you much chance of success. If you did succeed, it would be
the first one I have heard of since June 17, 1971 when Capital Gains tax was
announced.
-----------------------------------------
These older questions and answers address the
issue.
My question is: Canadian-specific
QUESTION: Hello
My husband and I have recently bought a mobile home on an acre in Nelson to move to in a few years when we find work there, or much later when we retire. We currently live in a rented apartment near Vancouver as we work in town. Our mobile home is rented out to tenants and we intend to let them stay until we would like to move to Nelson. It is the only home that we own but it is rented out until we can move there. Can you let us know how that would affect us in terms of Capital Gains? I know that each year we will have to claim the rental income and write off our costs for the mobile home / land against it. Thank you very much for your feedback.
---------------------------------------------------------------------------
david ingramn replies:
QUESTION: Hello
My husband and I have recently bought a mobile home on an acre in Nelson to move to in a few years when we find work there, or much later when we retire. We currently live in a rented apartment near Vancouver as we work in town. Our mobile home is rented out to tenants and we intend to let them stay until we would like to move to Nelson. It is the only home that we own but it is rented out until we can move there. Can you let us know how that would affect us in terms of Capital Gains? I know that each year we will have to claim the rental income and write off our costs for the mobile home / land against it. Thank you very much for your feedback.
---------------------------------------------------------------------------
david ingramn replies:
When you move into the former rental, it is considered a deemed disposal and re-acquisiton. Capital Gains tax is due and payable on any increase in value at that time.
UNLESS
If while renting, you did NOT claim CCA (Capital cost Allowance) or depreciation on the T776 (rental schedule), you can defer paying the tax at that time.
When you do move in, calculate the increase in value and report Half on schedule 3 of your return and half on schedule 3 of your husband's return That schedule will, in turn, result in one half of the half being put on line 127 of your return as taxable income.
You can now write a letter to the Tax office stating: " I hereby elect to defer opaying the tax triggered by my moving into my rental property under Section 45(3) of the income tax act."
You then write the amount on line 127 on line 256 where it is subtracted from taxable income. Write - see election letter beside line 256.
These older Questions are in the same vein.
|
Subject: Buying
a house to move into in 4 years -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 family
estate trust trusts income tax convention treaty |
|
From: David
Ingram <[email protected]> |
|
Date: Sat, 24
Feb 2007 20:21:54 -0800 |
|
To:
centapede-ca <[email protected]> |
My question is: Canadian-specific
QUESTION: We in the process of purchasing a house in Penticton and will rent it out, retire (in about 4 years)and move into it ourselves. If we live there for 2 or more years are we liable for capital gains for the period we collected rental income? What type of home insurance is best for a rental property? What are your thoughts re the real estate market in the Okanagan in the next five years - steady growth or a slump after "2010"? Many thanks, Jacalin
---------------------------------------------------------------------------david ingram replies:
You are liable for capital gains income tax for the period you rented it out. In fact "When you move into the house", you will trigger a capital gains tax because of a change in use from a business use to a personal use.
The good news is that you can make an election under Section 45(3) of the income tax act to defer paying the tax until you actually sell the property. To make the calculation, fill in schedule 3 and put the taxable profit on line 127 of your T1. then deduct the same amount on line 256 under Section 45(3). Note that under section 45(4) you can NOT make the election to defer the tax if you claimed CCA (capital cost allowance or depreciation) on teh unit.
I think the Okanagan AND the lower mainland markets are already overheated and think the prognosis is for little or no growth for the next five years but I have been wrong before.
That does not mean you should not buy because if I am wrong, it will cost so much more to buy six or seven years from now that you will be cursing me all the way to the mortgage broker. If you buy and it goes down a bit, it does not matter because you are buying it to live in and that gives you the property in the future at today's price which is historically lower.
david ingram
On November 10, 2007, David Ingram
wrote:
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax help
However, I regularly search for the words"PAYING CUSTOMER" and
always answer them first if they did not get spammed out. For the last two
weeks, I have just found out that my own email notes to myself have been spammed
out and as an example, as I write this on Oct 18, 2007 since June 16th (124
days), my 'spammed out' box has 34,939 unread messages, my deleted box has 11854
I have actually looked at and deleted and I have actually answered 1078 email
questions for clients and strangers without sending a bill. I have also
put aside 622 messages that I am maybe going to try and answer because they look
interesting. -e
bankruptcy expert US Canada Canadian American Mexican Income Tax
help
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 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 $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty advice on bankruptcy
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax help
Therefore, if an email is not answered in 24 to 36 hours,
it is likely lost in space. You can try and
resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you
will have to phone to make an appointment. Gillian Bryan generally accepts
appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday
VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.
david ingram
expert US Canada Canadian American Mexican Income Tax
help.
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:
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
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 help.
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." e
bankruptcy expert US Canada Canadian American Mexican Income Tax
help.
David Ingram gives expert income tax
& 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 $400 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. expert US Canada Canadian American Mexican
Income Tax help.
This is not intended to be definitive but in general I am
quoting $900 to $2,900 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.
$1,100 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
$2,900 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.
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 $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
This from "ask an income trusts 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 Income
Tax Convention. Advice on bankruptcy e
bankruptcy expert US Canada Canadian American Mexican Income Tax
help.
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty advice on bankruptcy
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, income trust, Income Tax Treaty Convention. - e bankruptcy expert US Canada
Canadian American Mexican Income Tax
help.
david ingram International non-resident
cross border expert income tax & immigration help estate family trust
assistance expert preparation & immigration consultant, income trusts
experts on rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer
preparers consultants Income Tax Convention Treaty.
advice on bankruptcy expert US Canada Canadian
American Mexican Income Tax help.
Be ALERT, the world needs more
"lerts".
bankruptcy expert US Canada Canadian American Mexican Income Tax
help. -
expert us Canada Canadian Mexico income tax
help
