# US Rental Income



## zinggn (Mar 27, 2018)

Had to rent my US house out for two months account a medical issue. Have prepared a US tax report and actually had a small loss with no positive net income...can I report this loss on my Cdn taxes for 2017? Should I? How do I do it?


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## zinggn (Mar 27, 2018)

This was an answer....It would be more appropriate and simpler to report the net rental income (if greater than zero) on the Foreign Income slip as Other Income and the foreign taxes paid, if any. The form T776 is designed and used for rental income of Canadian properties. Consider all the provisions under the Income Tax Act for rental income that have no bearing on how that US income will be assessed, further, if there is a net loss it is simply stated as 'Zero' income, and not a loss.



The asset is still reported as an 'Foreign Property' on the T1135, if it is not used primarily for personal use.


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## Kirkp3131 (Jan 15, 2020)

*Options for Refinancing a Rental Property in the US*

Hello,
I wanted to reach out to see if anyone was aware of any Mortgage Products/Programs available (preferably options for products within Canada, or in the US if possible) for Canadians who already own property in the United Stated (US). I currently have a mortgage with a US Bank for the Rental Property I own , but cannot refinance with them because I am not a US citizen/residence. Any sound advice would be appreciated. Thanks.


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## Mukhang pera (Feb 26, 2016)

Was this property always a rental? If so, how did you get financing with a US bank in the first place? Or was it your residence once upon a time? 

Has the US bank already told you that it will not finance you if you are not a US citizen or resident? You might want to shop around at other US banks, especially have you have a proven track record of making payments to a US bank. 

I lived in the US for a few years in the 1990s and bought a house financed with Washington Mutual bank. At the time, I was buying a residence. I refinanced with WaMu when I moved from the US to the Philippines for a few years and got no complaint about no longer being US resident. When WaMu went broke (not my fault, btw...I always made payments on time), my lender became Chase Bank. I carried on with that bank until the loan was paid off. I think the bank was content simply to have a good covenant and did not much care about the domicile of the covenantor.

Anyway, it seems to me that now some Canadian financial institutions are advertising more cross-border services, including making loans for Canadians who want to buy US vacation homes. One Canadian bank I deal with is RBC and I believe RBC has been touting its cross-border friendliness. I did not take time to read on this page, but maybe worth a look:

https://www.rbcbank.com/cross-border/us-mortgages.html#home


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## Kirkp3131 (Jan 15, 2020)

*Options for Refinancing a Rental Property in the US*

Firstly, let me say thank you very much for the quick and specific response. I did live in the US for a time and bought while I was living there so my approval at that time was not a problem. Now the bank that I am currently with has no problem taking my payments on time every month but will not work with me on refinancing my loan so that I can take advantage of the lower rates. I will take a look at the option with RBC that you mentioned and will explore, as you suggested as well, other options from other US banks. 

There is one other question I would like to ask of you is on the issue of Tax filing. I am assuming that you still own the property in the US, if so, do you still file US taxes of not. Just wanted to know if there is any value in continuing to file taxes in both countries (CAN & US). Thanks.


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## Mukhang pera (Feb 26, 2016)

Yes, I still own the US property. It has 2 units in it and I lived in one of them and the other has always been rented. 

When I bought, I sold my Vancouver house and I am thankful that I kept its US replacement. I sold the Vancouver house for $685,000 and it's now assessed at about $2.5 million. I would feel sick if I had cashed out of the US replacement dwelling, since it has appreciated similarly to the Vancouver property. If I had cashed out, I probably would have blown some or all of the dough. At that time, having money in real estate was about the only place I felt comfortable in keeping money. I am still that way. I have very little in the stock market. 

My only diversification in recent years is to invest a bit in forest lands. Moreover, keeping the US house has turned out well since the rents have at least kept pace with inflation and it has always had a pretty decent positive cash flow. I know I could probably sell out now and buy gaggle of cheap condos in Canada and maybe make more money, but I am content with what I have. I recognize too that, whatever any site such as Zillow.com, Realtor.com, Redfin, etc., might give as an estimated current value on any US property, it's not worth much until you sell and have the cash in hand. All the same, there's a certain psychological factor at play. But, when one has no intent to sell, any "on paper" value does not really count for much, but the rental income does. I saw my US property take a beating in value in the meltdown circa 2007 and for awhile after. But the rents still went up, and that's what counted. Still does. So I pay scant attention when folks like to proclaim "it's a bubble...it's going to burst" and all that gloomy talk. So what? Let it pop.

So, what with the rental picture described, I still file US taxes. I used to do the filings myself, just as I managed the property long distance for many years. Not the headache some suggest. Not at all. Never got a call in the night (or any any other time for that matter) about a backed up toilet. However, since the US property is now incorporated into my estate plan, to benefit my wife after I check out, 2 years ago I put the place in the hands of a property manager who came well-recommended by a reliable source. At the same time, I retained a cross-border tax specialist to do my US tax filings. The cost of both services has been worth the fairly small expense. The property manager sends me detailed monthly statements and makes a monthly deposit to my LA bank account. Then (I should see it very soon), the manager sends me a year-end final statement and summary. I simply forward that email to my tax accountant and he prepares my federal US and California state taxes from that statement. He sends me the documents to sign and mail and, as well, prepares in advance the forms I need, all filled in, for my quarterly US and CA tax instalments. He sends them with pre-addressed envelopes and all I do is make out the checks and mail them. He even sends me reminders when time to mail. I have already sent off the Jan. 15/20 payments and I see they have gone out of my bank. Actually, the CA taxes I can now pay online.

If you are a Canadian resident, not only do you have to file US taxes, but the income must be reported here. Canada gives a tax credit for taxes paid in the US. I do my own taxes for Canada, using some of the online software available. I find it quite simple. The US and CA tax filings were more onerous, so I am happy to let a specialist do it. I think I am paying less tax with him in charge than when I was handling it on my own. He knows what is fairly deductible and how to claim deductions that I think I may have missed sometimes.


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## Eclectic12 (Oct 20, 2010)

Since this is a US rental property, it's also going to count for the "hit $100K CAD cost" threshold to file a T1135 Foreign Income Verification Statement, like US bank accounts or US stocks held a taxable Canadian brokerage. When it was a personal residence, my understanding is that it didn't count but when it shifted to be a rental property, it counts.
https://www.taxtips.ca/filing/foreign-asset-reporting.htm


Cheers


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## Mukhang pera (Feb 26, 2016)

Yes, Eclectic is right. The T1135 has to be filed.


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