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International Question

First, thanks to everyone in this group. I posted a related question some months ago and this was the only place I got useful, accurate information. An accountant referred by my company's EAP was useless, as was the IRS.

Assume that I marry my Canadian girlfriend, but that for a while she remains in Canada and I remain in the USA.

In general, as best I can tell, we would get a credit on our USA joint tax return for taxes she pays to Canada, and in Canada all taxes are individual, so I would not have to file there.

So here's my question.

What if we buy a home in Canada? It would not be my principal residence, but it would be hers. If I can show that I paid the mortgage interest and property taxes, can I deduct them on my USA return?

Reply to
Hank Youngerman
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26 USC 163 has the rules about interest, and says that you can deduct the interest on a "qualified residence", definition below. I don't see anything limiting a qualified residence to the US, so somewhat to my surprise, it looks like you can.

R's, John

(4) Other definitions and special rules For purposes of this subsection-

(A) Qualified residence

(i) In general The term "qualified residence" means-

(I) the principal residence (within the meaning of section 121) of the taxpayer, and

(II) 1 other residence of the taxpayer which is selected by the taxpayer for purposes of this subsection for the taxable year and which is used by the taxpayer as a residence (within the meaning of section 280A (d)(1)).

(ii) Married individuals filing separate returns

If a married couple does not file a joint return for the taxable year-

(I) such couple shall be treated as 1 taxpayer for purposes of clause (i), and

(II) each individual shall be entitled to take into account 1 residence unless both individuals consent in writing to 1 individual taking into account the principal residence and 1 other residence.

Reply to
John Levine

If you buy a home in Canada with your spouse, you will have established residential ties to Canada and would then be personally required to file a Canadian tax return, even though you don't spend a lot of time there. At that point, the advice you received earlier that you don't need to file in Canada goes out the window. Please note that this ALSO applies if your spouse buys a house in Canada without your name on the papers as a couple can only have one principle residence per the Canadian Tax Act.

Reply to
parrisbraeside

How is that defined? Suppose she spends more time in the US than he spends in Canada, which is the principle residence?

Seth

Reply to
Seth

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Reply to
parrisbraeside

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