QUESTION: I am debating whether to buy a condo for an investment and rent it
out instead of contributing $500.00 per month to an RRsp I was going to buy
a condo for $100,000 and use it as a business with expenses and write offs
and claim it on my personal income tax at the end of the year and also have
the place rented out for $650.00 per month. My mtg would be about $700. per
month and My question is::: as a 10 year plan would I be better off doing
this than buying RRSP for the next 10 years as I can have tax write off's as
well as probable better gains over 10 years with the condo than a safe RRSP
??I currently work making about $80,000 per year and have about $100,000
already in RRSP and am 40 yr old.
---------------------------------------------------------------------------
david ingram replies:

In my experience, the rental condo would be a better investment over a ten
year period. There is much more time and effort involved but it returns the
larger and surer investment.

Do the math on a spread sheet at different inflation and interest rates.

Remember that both items are at historical highs at the moment so they will
both likely have a short term fall in the interim.

David,

In the email below you made the statement ...

"If you are a target shooter with guns, for instance,
you will be more comfortable in Detroit."

As a US resident with green card, I have always
thought that until I became a citizen, gun usage and
ownership were illegal.

I personally do not care since I don't have a gun nor
plan to, nor go shooting.

Just a curious question.

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

david ingram replies:


I have always understood that anyone in the US legally can possess a long gun. I have known dozens of Canadians who have taken their guns with them with no problem and do not remember a single individual who was stopped from taking a long gun into the US with his or her settler's effects.

Let me know if you find something that bars you Federally. It is quite possible that an individual state has a citizenship law that I have not heard of but the following two items seem to indicate that green card holders can have a gun at the very least.

United States Code states precisely that the militia is all male citizens and resident aliens at least 17 up to 45 with or without military service experience, and including additionally those under 64 having former military service experience, as well as including female citizens who are members of the National Guard. (Note: previously, only female citizens who were officers of the National Guard were included in this definition; this was changed to include all female citizens in 1993.) [6]. However, this position ignores the fact that this reference to federal entities, specifically the National Guard, does not appear in U.S. Federal Code until 1903[7] and thus cannot be said to be concurrent with the original intent of Second Amendment. Some people argue about even the number of commas in the amendment. Also, there is considerable disagreement about the organized militia and the unorganized militia and their relationship to the Second Amendment. Does the right pertain to only organized, well-regulated militias or all citizens? [8]

Go to http://www.nraila.org/GunLaws/FederalGunLaws.aspx?ID=60

for the federal rules. I will not even attempt to cover the 50 states.



Ineligible Persons

The following classes of people are ineligible to possess, receive, ship, or transport firearms or ammunition:

Those convicted of crimes punishable by imprisonment for over one year, except state misdemeanors punishable by two years or less.
* Fugitives from justice.
* Unlawful users of certain depressant, narcotic, or stimulant drugs.
* Those adjudicated as mental defectives or incompetents or those committed to any mental institution.
* Illegal aliens.
* Citizens who have renounced their citizenship.
* Those persons dishonorably discharged from the Armed Forces.
* Persons less than 18 years of age for the purchase of a shotgun or rifle.
* Persons less than 21 years of age for the purchase of a firearm that is other than a shotgun or rifle.
* Persons subject to a court order that restrains such persons from harassing, stalking, or threatening an intimate partner.
* Persons convicted in any court of a misdemeanor crime of domestic violence.
*
Persons under indictment for a crime punishable by imprisonment for more than one year are ineligible to receive, transport, or ship any firearm or ammunition. Under limited conditions, relief from disability may be obtained from the U.S. Secretary of the Treasury, or through a pardon, expungement, restoration of rights, or setting aside of a conviction.

Acquiring Firearms

The following restrictions apply to firearms acquired through purchase, trade, receipt of gifts, or by other means.

From Dealers

Provided that federal law and the laws of both the dealer's and purchaser's states and localities are complied with:

An individual 21 years of age or older may acquire a handgun from a dealer federally licensed to sell firearms in the individual's state of residence
* An individual 18 years of age or older may purchase a rifle or shotgun from a federally licensed dealer in any state
*
It shall be unlawful for any licensed importer, licensed manufacturer, or licensed dealer to sell, deliver, or transfer a firearm unless the federal firearms licensee receives notice of approval from a prescribed source approving the transfer.

Sale of a firearm by a federally licensed dealer must be documented by a federal form 4473, which identifies and includes other information about the purchaser, and records the make, model, and serial number of the firearm. Sales to an individual of multiple handguns within a five-day period require dealer notification to the Federal Bureau of Alcohol, Tobacco and Firearms. Violations of dealer record keeping requirements are punishable by a penalty of up to $1000 and one year's imprisonment.




In reference
--- US / Canada Income Tax Help - CEN-TAPEDE
<[email protected]> wrote:

> ------------------------------------------> Sent:
Sunday, February 04, 2007 5:08 AM
> To: [email protected]
> Subject: US USA / CANADA Income Tax Help - Escaping
> Canadian Tax
>
>
> Hello,
>
> I saw an answer you posted in December and gather
> you are a
> CAN-US taxation expert. I will have need of such
> expertise when
> I file my 2007 tax return.
>
> I was hoping you could point me in the right
> direction insofar as
> my situation is concerned. I am presently a
> Canadian, in terms
> of citizenship and residency. I have been offered a
> position in
> Detroit with an income of ~$100K USD. I'm also
> planning on
> purchasing a house.
>
> I am considering living in Windsor but working in
> Detroit, to
> benefit from the additional purchasing power of
> making US$ and
> spending CDN$. However, it occurs to me that with
> taxation, I
> may actually be losing big if I do this.
>
> Can you suggest some factors that I should consider
> and resources
> I should consult?
>
> Sincerely,
>
>
---------------------------------------------------------------
> david ingram replies:
>
> The only way for you to decide is to analyse the
> cost of the
> housing, the commute time, the cost of the commute
> and the after
> tax dollar you will receive.
>
> In general if you are married and your spouse does
> not work, your
> tax will be lower in Detroit than Canada because of
> the joint tax
> return.
>
> On the other hand, if you are single and are paying
> cash for your
> house, the difference in your personal income tax
> will not be big
> enough to worry about where you are living because
> of tax. You
> will pick amenities and quality of life. If you are
> a target
> shooter with guns, for instance, you will be more
> comfortable in
> Detroit.
>
> The only way to tell is to prepare pro-forma returns
> showing the
> "what if" of both scenarios.
>
> In the meantime, goto www.centa.com and read the Nov
> 2001
> Newsletter in the top left hand box to get ideas
> about how to
> make your mortgage interest deductible in Canada.
>
> Canadian Tax is not necessarily higher than the US
> anymore. When
> you add ALL the taxes including CPP, EI, Medicare
> and US FICA
> (Social Security) plus State, Federal, and
> Provincial taxes, a
> single person paying rent almost always pays more
> tax in the US
> now.
> -

QUESTION:

I hold a number of shares in the company of NCCC (National Credit
Counsellors of Canada)
I purchased these shares in 2003/2004 at an average price of 25 cents, and
the company declared their value at the time to be $1.00. I swapped these
shares into my self Directed RRSP at their declared value of $1.00, and have
just received a letter from the legal firm representing NCCC saying that the
increased value of the shares made by NCCC was incorrect. This has
considerably reduced the value of my RRSP, and to add insult to injury, NCCC
has reduced the share holdings of all share holders by 10 to 1 (100 shares
now becomes 10 shares)
The legal firm representing NCCC has sent shareholders a letter suggesting
that any shareholder affected by the disclosure by NCCC may come forward and
make a voluntary disclosure to CRA. I would be interested in your opinion
and advice as to what course of action, if any, I should take.
Thanks in advance for your help.



================================================
david ingram replies:

In my opinion, you should be putting the excess cash back into your RRSP to
reflect the true value. Then you should amend your tax returns for that
year to include a capital gain or maybe even a straight gain on any
difference between what you paid and the value that you actually put them
into the RRSP. Of course, a proper method would likely be to put the shares
in at exactly what you paid for them.

Sending the CRA a letter stating that you have corrected the innocent
mistake should suffice.

The good news is that because the stock in in an RRSP, the loss is 100 %
deductible. I have often said that the only stock to put in an RRSP is
stock that goes down because you get twice as much of a tax deduction that
way. I believe that if you are buying stock or mutual funds, they should
always be outside any RRSP so that you get the favourable tax treatment on
Capital Gains and Dividends.

Fred Snyder has a worksheet that shows that you break even at 4% and make
more money on a leveraged purchase where you borrow $100,000 and use the
interest as your 5% a year write-off as an alternative to putting $5,000 a
year into an RRSP.

Get him to do the paperwork for you.

Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one
of 17 different financial seminars in the boardroom of his office

Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)

Phone (604) 731-8900 to register

No cost - no obligation

Topics always cover mortgage interest as a deduction

other topics - getting the mortgage, estate planning, critical care
insurance, income taxation, differences between stocks and bonds, and
usually the most innovative HELOC mortgage offered in Canada from Manulife
Bank

If you are starting in downtown Vancouver and do not want to go home first,
one of the excellent THAI HOUSE restaurants is in the same building and
makes a nice start to the evening. If it is your first seminar, Fred will
buy you dinner if you are pre-registered.

I, david ingram, will be at the Thursday evening following the last Sunday
of each month to cover mortgage interest as a deduction and give the class
an adding test.

Hi David,
> > >
> > > My father refereed me to you. I have a question I own a small business
> > > corporation here in BC (xxxxxxxxxx Business Consulting Co) I also work as an
> > > independent consultant (not through my business consulting Co )and I am in
> > > New York right now on TN-Work Visa till Sept. I also own part of a small
> > > corporation in New York (xxxxxxxxxxxxxx) and I was just hired to work as a
> > > manager for Nxxxxxxxxxxxxx out of the Los Angeles office
> > > for next 3 years and to be paid in American dollars. Can you suggest a strategy
> > > for me so that I'm not paying tax 2 X (Canada & US) both on a personal and
> > > corporate level and the costs involved for you to help me implement these and
> > > anything else that might help me as I seem to be
> > > getting different types of advice.
> > >
> > > Kind Regards,
> > > ------------------------------------------
> david ingram replies:
> >
> > It sounds to me that you are likely in an illegal position in the US unless you have a separate visa to work in each of these entitities. For instance, merely answering the phone or taking out the garbage at the New York business you own could result in arrest, fine, and deportation.
> >
> > Without a separate visa, you can NOT work for the LA company. There is NO TN visa available for you to take over as the manager of a US company unless it was something like an engineering company requiring a professional degree to be a manager which is unlikely. A TN management "consultant" visa does NOT allow you to be a manager of anything in the US.
> >
> > As for tax, if you are genuinely living and working in the US, Canada would not be able to tax you on the US earnings under Article IV of the US / Canada Income Tax Treaty.
> >
> > Goto www.centa.com and read the US/Canada Taxation section in the second box down on the right hand side.
> >
> > You HAVE TO / MUST deal with the visa question first. You can find a little more out about the proper visa at www.centa.com and read the "Entering the USA" section in the second box down on the right hand side.
> >
> > A quick search of the internet found you involved as manager of a band, involved with Nettwerk, involved with the 2010 paralympics, and your consulting company in Vancouver and New York and so on.
> >
> > If I can find this so quickly, Homeland Security can do the same thing.You likley need a phone consultation with myyself or Joe Grasmick (www.grasmick.com) or Greg Suskind at www.visalaw.com.
> >

QUESTION:

In a case where an American parent living in the US passes away with no will (from Michigan), but one of the heirs is a Canadian (and not an American), is the Canadian heir treated like an American heir? I understand how US estate tax works and the lack of a Canadian inheritance tax, but I'm unclear on the cross-border issue. For example, would the Canadian (I presume a non-resident alien from an American perspective) have a reduced exemption? I also understand that certain states do not allow aliens to hold property (yet they might inherit that property). Thanks much!

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

david ingram replies:

I am always willing to be corrected but there are no Michigan property ownership problems that I am aware of and there should not be any problem with the Canadian Heir receiving their share after the US estate tax (if any has been paid). There are still problems with a non-resident alien spouse which usually require a QDOT (qualified Domestic trust) to go away but none that I am aware of for a child.

Hello Taxman!!
>
> I have a question for you. I am an IT Consultant working in the USA on a TN Visa, but with a Canadian Citizenship. I had been doing this for over a year with my former Canadian employer. This tax year, I submitted US federal and state income tax returns with foreign income, and then I filed a Canadian return. This coming year, my situation will change. I plan to incorporate myself in either Canada or the USA , I was thinking a Delaware LLC, but I’m not sure which would be more beneficial for me. I will be getting contracts on 1099 with no tax withholdings. My residence is in New Jersey , but I have real estate in Ontario as well. What will be my tax liabilities? I’m assuming I still have to do returns for both countries, personal and corporate, but who would I actually pay tax to, and to which country would I be reporting as foreign income?
>
> Also, I’m wondering about RRSP’s? Are these deductible in the USA too, or do I need to open up an American IRA?
>
> I will most likely dump off all my receipts to an international accountant and let them do it all for me. But I guess I could use some advice on what would save me the most in tax dollars. BTW, what are your fees like, to do personal and corporate returns, Canada and US?
>
>
> Thanks a lot.
>
>
> -----------------------------------------
>
>
>
> david ingram replies:

Watch out - incorporating could end up with your being denied a TN visa. Remember that you need a separate TN for each company you consult for unless you are an employee of one company that is selling your service. If so, you can NOT be the controlling or even a major shareholder.

Your tax liabilities depends upon where you are deemed to be a residient under Article IVof the US/Canada Tax Treaty.

An RRSP does you no good in the USA. It also requires you to file forms TDF 90 and 8891. If you already have an RRSP, these must be filed already.

If you are a resident =of the US, you will pay tax on your world income to the US. If you have Canadaian income, you will pay tax to Canada first on that income and then claim foreign tax credits in the US on form 1116 for the tax paid to Caanda.

dear taxman
I am a Canadian living in bc and will be moving to Florida in 2 years for a corporate sponsored greencard(xxxxxxxxxxxxx).the requirement is that I stay for at least a year to receive the green card.it is not a scam as many of my old co-workers have gone thru the system and received their green cards.as noted,I wish to do the same.I do not wish to sell any of my properties here in Canada,nor my house.I have a wife and 2 children who may wish to stay in Canada for about 6 months per year or less depending on the tax implications.do I need to give up my house in bc,or can I work and continue to work in the US,while my family stays here for a fair bit of time?likewise does this change my residency status?
Is it possible to have a family that spends most of its time in Canada and for me to live and work most of my time in the US and still maintain my green card?Ideally,after receiving the greencard,I would like to continue working in the US,and still have my house here.Is there a way of doing this?thanks for your input.as the time gets closer,I will be needing to hire a good taxman.
========================================================
david ingram replies:

Your question was by-passed because of the shear number of questions. Your name was added to the list because that way, your question will get answered eventually but I am about 200 questions behind right now. However, by asking twice and seeing that the question has an intereting twist to it.

Interestingly, the question I answeredd before this also quoted Article IV of the US / Canada tax treaty which will govern your taxes.

I am going to repeat ARTICLE IV here again. and then comment after it:

CANADA / UNITED STATES INCOME TAX TREATY 1980

Article IV - Fiscal Domicile - (it is the same number in most treaties)

For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation therein by reason of that person's domicile, residence, citizenship, place of management, place of incorporation or any other criterion of a similar nature, but in the case of an estate or trust, only to the extent that income derived by the estate or trust is liable to tax in that State, either in its hands or in the hands of its beneficiaries. For the purposes of this paragraph, a person who is not a resident of Canada under this paragraph and who is a United States citizen or alien admitted to the United States for permanent residence (a "green card" holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United states and that individual's personal and economic relations are closer to the United states than any other third State. The term "resident" of a Contracting State is understood to include:

(a) the Government of that State or a political subdivision or local authority thereof or any agency or instrumentality of any such government, subdivision or authority, and

(b) (i) A trust, organization or other arrangement that is operated exclusively to administer or provide pension, retirement or employee benefits, and

(ii) A not-for-profit organization that was constituted in that State, and that is, by reason of its nature as such, generally exempt from income taxation in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;

(d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.



In your case, because you will have a green card and be spending significant tiome in the US, you will be considered a residnet of the US for tax purposes. However, because you are also spending time in Canada and your wife and children and properties are here, Canada will want to tax you as well.

Presumably, you will rent or buy a place in Florida.

Article 2 a) will note that you have a permanent home available to you in both places. It wil lthen look at your personal and economic interests. Becvause you have significant asets in Canada and your family is here, that will settle it. The US will tax you on your American Income and Canada will tax you on your World incoem including the Florida income. Canada will allow you a foreign tax credit fo rthe taxes you have paid to the US so there will NOT be double taxation but there will be Canadian taxation.

On the other hand, if you rented (not sold) all your Canadian Properties on a long term basis, and took your wife and children with you, you would only be taxed in Canada on your Canadian rents and on your world income in the US, AND, your wife and children would get green cards and you could all get US citizenship which could / would be a tremendous asset to your children in the future..

Goto www.centa.com and read the US / Canada Taxation section in total.

Before you do any of this, you ned to sit down with someone like myself. Your spouse should be part of the meeting as well.

I do phone consultations as well. The kind of consultation you need for thjis would run from $350 to $700 in person or by phone.

And the answer is that if you sp[end enough time in the US and make your home there more than six months of the year, you can maintain your green card and your Canadian residence as well. However, you will not qualify for BC medical becaus eyou have to sleep in BC for more than 183 days a year to qualify for BC medical and you have to be in teh US for more than 183 days in a year to maintain your green card.

Hi david

I am Jurock Insider subscriber and read your tax tips on the Jurock site
regularly.

I am looking for an expert on UK/Canada tax law regarding selling a property
in the UK and transferring the money to Canada while minimizing my Capital
Gains.

I am a realtor and invest in real estate on the side.

If you have knowledge regarding UK/Canada tax issues how do you charge for
consultation etc and if you don't do this aspect of taxation then perhaps
you can recommend someone experienced in this respect. I would need to
consult on this issue in the next two weeks no later.

Regards


----------------------------------------------------------------------
david ingram replies:

I do not consider myself a particular specialist but tried typing income tax expert UK Canada real estate into google and came up number one so I should at least try.

Great Britain has an indexation (inflation) exemption from 1982 to 1998 and then starts a tapering program to tax the profit.

Canada is simple in return. At the moment, we tax 50% of the profit at your highest marginal tax bracket.

You would pay tax to the UK first and then report the income again on your Canadian return and claim a foreign tax credit for the tax paid to Great Britain. Essentially, you would be paying whatever tax was highest.

Transferring the funds to Canada is best done with a bank to bank electronic transfer.

Hope it helps.

If I made 100k in CAnada for 2006 tax year and am a US Citizen, what forms do I have to file for the US? Is it better to take a credit or apply for a foreign tax deduction? Also, am I supposed to have my T1 attached to the US 1040?

Thanks



david ingram replies

If you have children, file form 1116 because that leaves you eleigible for up to $1,000 child tax benefit per child from the US even if you have no US income.

If no children, form 2555 is easier.

If filing form 1116, attach a copy of the Canadian T1 to the 1040.

goto www.centa.com and read the Oct 1995 newsletter in the top left hand box and the "US/Canada Tax" section in the second box down on the right hand side.