Rental Property in Canada

MCH · Post by **MCH** » Sat Jan 13, 2007 2:30 pm

Hello,
I am Canadian working undder h1 in the US. I ended all ties to Canada in May 2005, but kept rental property.
Unfortunately, did not apply for Non Resident account, and did not submit to CRA during 2006, 25% of gross rents. Am I in trouble?
Also, the tenants are moving out in April, can I keep the house empty as a cottage or I must rented out?

Thanks for your help.

nelsona · Post by **nelsona** » Sun Jan 14, 2007 10:42 am

'Trouble' is a strong word. You owe taxes (a lot more than you should). You need to orrectly file for 2005 FAST and 2006, and correct your situation. There will be interst and penalties. You have to report all the rent in US too, and can take credit for Cdn taxes on your US return.

As to leaving it empty, as long as you maintain more ties in US than Canada, keeping the house empy will NOT make you taxable in Canada on your world income, by treay. You may have to file, but you won't be taxable on your US income.

MCH · Post by **MCH** » Sun Jan 14, 2007 4:38 pm

Many thanks for your reply. I should have been more clear about my question. I am ok for 2005, we reported collected rents on the Canadian & US side. I am worry about the 2006 only because I did not pay 25% of gross rent every month, and did not apply for NR Account #!
As for having more ties to the US than Canada, how would I do that? My wife left her work to join me in the US, and my kids are 27 & 30 years of age, they live and work in Canada. Should I consider buying a home in the US?
Best,

nelsona · Post by **nelsona** » Sun Jan 14, 2007 6:34 pm

I don't understand how you would be 'ok' for 2005 and not for 2006, as CRA would have insisted, when you declared yourself non-residdnt in 2005, that you have rental income remitted in 2006.

Moreover, you should have reported your rental income on a '216' return in 2005, otherwise you are not allowed top claim rental expenses.

I urge you to look at the CRA website on non-residents and rental income.