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Where to report foreign rental income?


Jan1
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There is Foreign income and property. Do I need to first complete Foreign income and property to enter gross foreign rental income and net foreign income and foreign tax paid  and then complete form T776  in Canadian dollars?  Thanks in advance.

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I did.  The foreign income-rental form was produced, but the form only includes a few items including  for just includes country from where you received the foreign income, gross amount of foreign rental income, net foreign rental income or loss, amount of foreign tax paid  etc. Do I need also complete the detailed form of T776 in Canadian dollars or in foreign currency. If I also compete  the form T776, does it mean I report this foreign rental income two times? Thanks,

 

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Hi @Jan1, To enter the amount of foreign rental income, you have two procedures to perform.

A. First, you must produce a rental income statement form by following these steps:

1. In the "Left side menu on the Interview tab", select "Interview setup".

2. On the right-hand side of the screen, go to the "Rental income" group, check the boxes for "Rental property income" and click "Next" at the bottom of the page.

3. In the "Left side menu on the Interview tab", select "Rental Income" and on the right-hand side, choose "T776 - Rental income property".

4. Since the building is located outside of Canada, you have 3 choices.

     A) On page "T776 - Rental Property Identification". You can leave the "Address of the rental property" blank and the program will use your home address of Canada and you may submit your return via NETFILE.

     B) Your second choice, which we favor, in the section "Address of the rental property" you indicate the civic number of the foreign property on the line "Street" and the line "City" you enter the city and state and the country. However, you indicate your province of Canadian residence and your Canadian postal code. You will be able to send by NETFILE.

     C) If you enter the full address of the property in the country where your property is located, you will not be able to submit your return by NETFILE, and then you must mail it to Revenue Canada.

5. Once the information regarding the identification of the property has been entered, click "Next" at the bottom of this page and you will have access to the items "Income, expenses", "Labour costs", "CCA" and "Partners" in the "Left side menu on the Interview tab". Complete the sections that relate to your situation.

B. Then, as a second operation, you must enter your net rental income and foreign taxes paid in the foreign income section by following these steps:

1. Return to the "Left side menu on the Interview tab", select "Interview setup".

2.  On the right-hand side of the screen, go to the "Investment income and expenses" group, check the boxes for "Foreign income or foreign property (T1135)" and click "Next" at the bottom of the page.

3. Select "Foreign income & property" and in the screen to your right, click the plus sign "+" icon to the right of the line "Foreign rental income".

4. On the page entitled "Foreign income - rental", indicate the country where the income was earned and other relevant information, enter the net rental income on the line "Foreign business income entered as business income". If applicable, enter the "Amount of foreign tax paid" on this rental income and click "Next" at the bottom of the page.

Form T2209 will be produced by the program and the program will tell you if you are eligible for the federal foreign tax credit. While for residents of Quebec, form TP-772 will be generated by the program and will show you on line 49 the foreign tax credit.

 

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  • 2 weeks later...

Nawal, I  followed the 2 steps you outlined to report foreign rental income -- adding a T776 for the foreign rental property and adding foreign rental income.

1. On the foreign income rental page, what amount should I use for "Foreign rental income entered as rental income"? The help link refers to business income. This is non-business income. Do I use the net amount after foreign tax paid or gross amount before foreign tax paid?

2. When I complete these 2 steps, the Summary of Foreign Income page generated in the tax return PDF is incorrect. It doubles the foreign rental income. I suspect it is because I am inputting an amount in the T776 as well as under foreign rental income. However, net income reported on line 23600 is correct and does not double that amount. Could you please advise?

Thank you.

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  • 1 month later...

Hi @Mark Robson, To enter the amount of foreign rental income, you have two procedures to perform.

A. First, you must produce a rental income statement form by following these steps:

1. In the "Left side menu on the Interview tab", select "Interview setup".

2. On the right-hand side of the screen, go to the "Rental income" group, check the boxes for "Rental property income" and click "Next" at the bottom of the page.

3. In the "Left side menu on the Interview tab", select "Rental Income" and on the right-hand side, choose "T776 - Rental income property".

4. Since the building is located outside of Canada, you have 3 choices.

     A) On page "T776 - Rental Property Identification". You can leave the "Address of the rental property" blank and the program will use your home address of Canada and you may submit your return via NETFILE.

     B) Your second choice, which we favor, in the section "Address of the rental property" you indicate the civic number of the foreign property on the line "Street" and the line "City" you enter the city and state and the country. However, you indicate your province of Canadian residence and your Canadian postal code. You will be able to send by NETFILE.

     C) If you enter the full address of the property in the country where your property is located, you will not be able to submit your return by NETFILE, and then you must mail it to Revenue Canada.

5. Once the information regarding the identification of the property has been entered, click "Next" at the bottom of this page and you will have access to the items "Income, expenses", "Labour costs", "CCA" and "Partners" in the "Left side menu on the Interview tab". Complete the sections that relate to your situation.

B. Then, as a second operation, you must enter your net rental income and foreign taxes paid in the foreign income section by following these steps:

1. Return to the "Left side menu on the Interview tab", select "Interview setup".

2.  On the right-hand side of the screen, go to the "Investment income and expenses" group, check the boxes for "Foreign income or foreign property (T1135)" and click "Next" at the bottom of the page.

3. Select "Foreign income & property" and in the screen to your right, click the plus sign "+" icon to the right of the line "Foreign rental income".

4. On the page entitled "Foreign income - rental", indicate the country where the income was earned and other relevant information, enter the net rental income on the line "Foreign business income entered as business income". If applicable, enter the "Amount of foreign tax paid" on this rental income and click "Next" at the bottom of the page.

Form T2209 will be produced by the program and the program will tell you if you are eligible for the federal foreign tax credit. While for residents of Quebec, form TP-772 will be generated by the program and will show you on line 49 the foreign tax credit.

The foreign tax credit will be carried forward by the program to line 40500 of the federal return and line 409 of Schedule E of Quebec, Foreign Tax Credit. In addition, the program will generate federal form T776 - Statement of Real Estate Rentals, as well as form TP-128 - Income and Expenses Respecting the Rental of Immovable Property.

For more information, please consult the following link:

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rental-income-non-resident-tax.html

Remember, if your foreign property has a value above $100 000 CAN., do not forget to indicate at "CRA questions" and complete the "T1135 Foreign Income Verification Statement".

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10 hours ago, Nawal said:

Hi @Mark Robson, To enter the amount of foreign rental income, you have two procedures to perform.

A. First, you must produce a rental income statement form by following these steps:

1. In the "Left side menu on the Interview tab", select "Interview setup".

2. On the right-hand side of the screen, go to the "Rental income" group, check the boxes for "Rental property income" and click "Next" at the bottom of the page.

3. In the "Left side menu on the Interview tab", select "Rental Income" and on the right-hand side, choose "T776 - Rental income property".

4. Since the building is located outside of Canada, you have 3 choices.

     A) On page "T776 - Rental Property Identification". You can leave the "Address of the rental property" blank and the program will use your home address of Canada and you may submit your return via NETFILE.

     B) Your second choice, which we favor, in the section "Address of the rental property" you indicate the civic number of the foreign property on the line "Street" and the line "City" you enter the city and state and the country. However, you indicate your province of Canadian residence and your Canadian postal code. You will be able to send by NETFILE.

     C) If you enter the full address of the property in the country where your property is located, you will not be able to submit your return by NETFILE, and then you must mail it to Revenue Canada.

5. Once the information regarding the identification of the property has been entered, click "Next" at the bottom of this page and you will have access to the items "Income, expenses", "Labour costs", "CCA" and "Partners" in the "Left side menu on the Interview tab". Complete the sections that relate to your situation.

B. Then, as a second operation, you must enter your net rental income and foreign taxes paid in the foreign income section by following these steps:

1. Return to the "Left side menu on the Interview tab", select "Interview setup".

2.  On the right-hand side of the screen, go to the "Investment income and expenses" group, check the boxes for "Foreign income or foreign property (T1135)" and click "Next" at the bottom of the page.

3. Select "Foreign income & property" and in the screen to your right, click the plus sign "+" icon to the right of the line "Foreign rental income".

4. On the page entitled "Foreign income - rental", indicate the country where the income was earned and other relevant information, enter the net rental income on the line "Foreign business income entered as business income". If applicable, enter the "Amount of foreign tax paid" on this rental income and click "Next" at the bottom of the page.

Form T2209 will be produced by the program and the program will tell you if you are eligible for the federal foreign tax credit. While for residents of Quebec, form TP-772 will be generated by the program and will show you on line 49 the foreign tax credit.

The foreign tax credit will be carried forward by the program to line 40500 of the federal return and line 409 of Schedule E of Quebec, Foreign Tax Credit. In addition, the program will generate federal form T776 - Statement of Real Estate Rentals, as well as form TP-128 - Income and Expenses Respecting the Rental of Immovable Property.

For more information, please consult the following link:

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rental-income-non-resident-tax.html

Remember, if your foreign property has a value above $100 000 CAN., do not forget to indicate at "CRA questions" and complete the "T1135 Foreign Income Verification Statement".

Thanks for your help!!

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Thanks Nawal I’m having a hard time completing the T1135 for US rental. The property cost 200 k Canadian. Can you please assist me in completing it. I know I fill out Part A of the form. Which boxes do I check and I know I put in gross income what do I place under Gain(loss) from the disposition from all specified foreign property? I still have ownership.

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On 6/1/2021 at 4:31 PM, Mark Robson said:

Thanks

Hi Nawal I have done everything for the foreign property and now want to netfile but it won’t let me. It says I can’t because “the tax payer is claiming a split pension amount” it says the same message in my wife’s as well. Can you assist?!

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