Questions on claiming US rental income for Canadian

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skoper
Posts: 38
Joined: Wed Aug 26, 2009 9:15 pm

Questions on claiming US rental income for Canadian

Post by skoper »

Hi there, I own US rental property which I bought when I was working in the US under a TN in 2013. This will be my first time filing for full years in Canada and US as Canadian tax resident. My plan is as follows:

1) File 1040NR, and claim US-Canada Treaty Clause XXIV in Schedule OI.
Question: Is the rental income I indicate here based on the rental income I claim on my Canadian tax returns, using CRA CCA rules?

2) The rental management company did not properly withhold any tax and I plan to file a W-8ECI with them going forward. Is the same as electing 'net basis'? What is the conseqence of not having had a W-8ECI with them in place last year?

3) For my Canadian return, do I calculate CCA based on the remaining undepreciated value determine by 3 years of US-based MACRS? Or restart new CCA calculation based on FMV upon entry into Canada?

Thanks!
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

1. XXIV has no bearing on your filing and reporting rental income on 1040NR. It is US rental income, ans is fully taxable in US. Any double taxation relief will occur in Canada. You will determine the US taxation as you always have: Net rental income as determined on schedule E and report the income on page 1.

2. Once you file w8eci you are no longer subject to withholding bu the renayl management company (you should remit quarterly payments of your estimates tax yourself however. In fact, until you file w-8eci, the management firm is liable for the 30& withholding, so it was in their interest to force you to do give them a w-8. In the end you are going to pay the tax, so no harm done.You may also have state income taxes.

3. CCA would be based on the FMV when you arrived, Use CCA only to the extent needed to recoup your US taxes with FTC. You do not have to use the entire CCA allowed each year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
skoper
Posts: 38
Joined: Wed Aug 26, 2009 9:15 pm

Post by skoper »

Thanks nelsona, all understood.

For the first year on CCA, does the half-year rule apply in this case?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Since it was deemed to be acquired last year, you might as well follow that rule.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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