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Email this10:38 pm
March 3, 2022
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This is my 1st year filing without using an accountant, Im using Turbo Tax. It was going well until I came across the T1135. My wife and I are canadian citizens and we have 4 rental properties in the USA. I’m filling out the Foreign Income Verification Statement (T1135). The form asks “Max cost amount in 2021” & “Cost amount at year end” & “Income”. I assume “Income” is rent received minus expenses…Yes?? How do I calculate “Max cost in 2021” and the “Cost amount at year end”? Thanks for any help.
In checking previous years tax returns my accountant selected the cost range of $100,000 - $250,000. I wondered if I should just use similar numbers that were used in pervious years.
11:02 am
April 16, 2020
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This might help if you haven't seen it :
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-answers-about-form-t1135.html
Per that link : I have not dealt with the case of owning foreign real estate and earning rental income, but for foreign stocks or bonds, I have always reported "Cost amount" figures as of date of purchase ( price * exchange rate ) and therefore "Max during the year" and "Year end" amount are always the same ( unless there was a sale or other disposal of the property during the year ).
However, I would note also :
- the comments on the link above about different scenarios for "Real Property"
- and on the T1135 form itself about "persional property" and/or "property used or held exclusively in carrying on an active business" ... whether your rental properties constitute "an active business" is beyond my ability to comment, but I believe I've seen comments on other threads on this topic. I'll see if I can find them again.
Hope this helps : there's a lot to wade through.
11:09 am
April 16, 2020
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Sorry, to be clear : the above URL suggests that it might be relevent only to non-residents, but I believe it to be generally applicable (although there may obviously be nuances for non-residents).
The main CRA T1135 page is at :
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1135.html
and the above link (plus other useful ones) is from that page.
11:33 am
April 16, 2020
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The discussions I have misremembered were in these threads about active stock trading in a TFSA :
https://www.highinterestsavings.ca/forum/tax-free-savings-accounts/tfsa-swapping-guilty/
https://www.highinterestsavings.ca/forum/tax-free-savings-accounts/tfsa-investing-v-s-trading/
Some of the same principles may (or not) apply to rental properties being "active business" (or not), but again that's way beyond my scope.
2:18 pm
October 27, 2013
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It is my view Cost does not change at any time unless there were acquisitions or dispositions. IOW, if you keep the same properties year in and year out, there should be no difference from year to year in "Max cost during 2021" and "cost at end of year".
I would also assume Income is net of operating Expenses, just like mutual fund or ETF investment income is net of MER.
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