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kl3618
New Member

Foreign Property Tax

Does anyone know the Canadian/US tax implications on owning a house in Canada and living in the US (as a non-resident of Canada)?

 

I am currently a permanent resident in the US and am registered as a non-resident in Canada. My parents are in Vancouver, and I am planning on buying them a house there. The mortgage will be under my name and the registered owner of the house will probably also be under my name as well.

Here are a few questions I have:


1) Will I need to report the property in Canada on my US tax forms? What if it's a joint ownership with my parents? (I know that I will probably need to file an FICEN if I have $10k in funds at any point in my Canadian account)
2) Will I be able to get deductions on my US tax forms for the mortgage I paid on the property in Canada?
3) Will I need to file Canadian tax as well for owning the property? (I'm not sure if that will affect my non-resident status even if my parents are the ones living there)
4) If my parents decide to sublet the house, and if they were to collect and keep the rent, will I need to report the rent collected on my US tax forms as well? (I understand that they will need to file the rent they collect on their Canadian tax forms)

 

Thanks in advance!

2 Replies
pk
Level 12
Level 12

Foreign Property Tax

@kl3618  noting that you are a resident of the USA ( Green Card ),    (a) what country are you a citizen of; (b) your parents ; (c) what do you mean by being registered as non-resident of Canada -- if you do not live there  or earn there, then  being non-resident has no meaning -- what am I missing here ?

1. There is no requirement to report ownership / purchase of an asset / home in Canada for US tax purposes .  However, if you want to use the mortgage deduction ( when itemizing ),  the loan must be in your name, you must be liable for it and you must have been paying the mortgage.  Ditto for property tax deduction.

1.b -- FINCEN form 114 is for reporting liquid assets ( bank accounts ) and has nothing to do with the property acquisition

2.mortgage question answered above

3. don't know if Canada will tax ownership  of property   of Non-Residents -- please seek  Canadian tax  advice  ( there may be a separate  community for Canadian taxes )

4 If the property is used a rental ( short-term or otherwise )  and the property is in your name ( i.e. owned by you ) ,  you will have to report  this income  as rental income on schedule-E. And any INCOME taxes paid to Canada on this may be eligible for foreign tax credit -- please read up on US-Canada tax treaty.

 

If you need more specific answers , please provide the  answers to questions above and describe more of the actual situation and what you are trying to achieve

Rick19744
Level 11

Foreign Property Tax

In addition to @pk questions and response, keep in mind that there are two foreign asset reporting forms; the FINCEN (also known as FBAR) and then also form 8938.

In a quick review of the form 8938, it does not appear that this form would be required to be filed either, but keep in mind, your facts a limited and my review was brief.

See the following from the IRS Q&A:

Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938.  For example, a personal residence or a rental property does not have to be reported.

If the real estate is held through a foreign entity, such as a corporation, partnership, trust or estate, then the interest in the entity is a specified foreign financial asset that is reported on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.  The value of the real estate held by the entity is taken into account in determining the value of the interest in the entity to be reported on Form 8938, but the real estate itself is not separately reported on Form 8938.  

*A reminder that posts in a forum such as this do not constitute tax advice.*
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