Wife is American - Lives in Canada - Commutes daily

cndnheat · Post by **cndnheat** » Fri Jan 14, 2011 5:08 pm

Here is my situation - My wife is American and lives in Canada. She commutes daily to the USA to work. I am Canadian and I am employed in Canada.

Here are my questions:

1. We purchased a home in 2009 and also purchased a rental home in 2009. She is on both mortgages. For Canadian tax purposes, we intend to declare me as having 70% interest and her as having 30% interest. Are there any write-offs available for her in the USA on the rental property or home property? If so, does she have to declare ALL OF THE RENT collected or just the 30% portion of the rental income?

2. Does she have to report that she co-owns two properties in Canada? If so, how does one go about doing that?

3. When she claims me on her 1040, do I have to file anything with the IRS?

I'm probably going to have more to post here, but this is a start.

Thanks!

nelsona · Post by **nelsona** » Sat Jan 15, 2011 6:17 am

1. She declares 30% of the rental income and expenses. She has nothing to report about her home. he can deduct the mortgage on the home.
2. By filing her rental income. See above.
3. If she files MFS, no.

cndnheat · Post by **cndnheat** » Sat Jan 15, 2011 9:30 am

Thanks, nelsona!

For clarification purposes....

1. She does not have to report that she has an interest in both homes correct? She just reports the rental income by filing a Schedule E.

2. When I do the T776 for Canadian Income Tax, do I fill it out at 100% or at 70%? If I fill it out at 70%, do I have to report her 30% share on her Canadian return as well?

3. Do I have to complete a Schedule "E" at 100% and indicate she only owns 30%, or do I just fill it out at 30%?

Thanks!

nelsona · Post by **nelsona** » Sat Jan 15, 2011 11:58 am

She will file her own taxes in canada, reporting whatever % she owns.

cndnheat · Post by **cndnheat** » Sat Jan 15, 2011 1:03 pm

Thanks again, nelsona.....

Next question relates to the Principal Residence:

1. Because she owns 50% of our actual Principal Residence here in Canada, can she write of 50% of the Property Tax or 100% of the Property Tax on the Principal Residence?

2. Likewise, can she write off 50% or 100% of the mortgage interest?

Thanks!

nelsona · Post by **nelsona** » Sat Jan 15, 2011 3:45 pm

If she files MFS, she can only claim 1/2.

I wouldn't worry too much about her US taxes. She will end up paying Cdn rates on all her income, and no extra tax on anything from canada in US.

Any tax savings she creates in US will merely be added to the tax she pays in Canada.

cndnheat · Post by **cndnheat** » Sat Jan 15, 2011 4:28 pm

Thanks nelsona....

Got it all figured out now I think....

I'll go ahead and do the 50% because it'll give us a bit of a refund that she can throw onto her Canadian balance...we'd rather deal with the CRA and not the IRS.

In other words, we'd rather owe to one entity instead of two :-)