Getting Married to US Citizen and buying property

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bigricardo
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Getting Married to US Citizen and buying property

Post by bigricardo »

My fiance and I plan on getting married this year. We both live in the US. I'm a Canadian non-resident, and she's American. We want to buy a rental property up in Canada as an investment.

If we are married, will be both have to file Canadian tax returns for the rental income we get on the condo, or can just one of us file? Also, i heard that we have to give 25% of rental income to the government each month. Do you know if this can be once a year instead of every month?

I'm also wondering what happens if we move up to Canada? From what I understand, the depreciation on the property will not have to be repaid if I don't live in the US anymore, but since my wife will have to keep filling out tax returns in the US because she's a citizen, will she have to repay it.

It seems like if its possible for us to pool our money, but have everything in only one person's name then things will be less complicated. Doing 50/50 on income tax forms seems too complicated.

Any advice would be greatly appreciated. Thank you.

nelsona
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Post by nelsona »

Who reports the income (in Canada) will depend on who owns the property. You will report the rental income (and depreciation, as you said) also on your joint US return while you are in US, and take a foreign tax credit on 1040.

If you own it jointly, then yes, you will each have to file a '216' return. This will allow you to, in the end, pay much less than 25% tax.

As to the withholding on the rent, NO, you cannot remit less frequently, as you would then be penalized for late withholding. What you can do is file an NR6 , allowing you to remit the 25% tax on NET rental income rather than gross.

Go to the international section of the CRA website for more info on 216 returns and other aspects of non-resident taxation of Cdn real estate.

And, yes, your USC spouse can run into tax problem with the difference in how depreciation is handled cross-border.

<i>nelsona non grata</i>
bigricardo
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Post by bigricardo »

I'm unable to find the website that you suggested. Could you tell me how to navigate to this website?

Also, just to clarify, the tax return we fill on for Canada would only be for the rental income, correct?
bigricardo
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Post by bigricardo »

Carson
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Post by Carson »

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">Also, just to clarify, the tax return we fill on for Canada would only be for the rental income, correct?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Nelson was referring to a "216" non-resident rental return which, yes, would include only your rental income/expenses. If you become a Canadian tax resident, you would report the rentalon your regular tax return along with your other world income.


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Regards,

Carson Hirner
nelsona
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Post by nelsona »

... and of course, if they had any other Cdn income not subject to automatic NR tax (wages, realestate cap gains, etc) a second Cdn non-resident return would have to be filed, apart from the 216 return.

Or, if Cdn pension/RRSP income was to be favourably taxed by filing a 217 return, this too would require a second tax return.



<i>nelsona non grata</i>
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